Loblaw selling off gas stations in $540M deal
The Loblaws flagship location on Carlton Street in Toronto on May 2, 2013. (Aaron Vincent Elkaim / THE CANADIAN PRESS)
Published Wednesday, April 19, 2017 9:46AM EDT
Last Updated Wednesday, April 19, 2017 10:00AM EDT
TORONTO -- Loblaw is selling all 213 of its gas stations across the country for $540 million to Brookfield Business Partners and its partners.
While Brookfield (TSX:BBU.UN) would rebrand the stations to Mobil, they would continue to use the PC Plus loyalty program offered by Loblaw (TSX:L).
The proposed deal is subject to certain conditions, but is expected to close in this year's third quarter.
Brookfield Business Partners, a unit of Brookfield Asset Management (TSX:BAM.A), says it sees potential for expanding the network of Loblaw-owned gas stations and associated kiosks after the deal closes.
"This transaction aligns with our strategy of owning and adding value to high quality businesses with solid long-term fundamentals in sectors we know well," Cyrus Madon, CEO of Brookfield Business Partners, said in a statement Wednesday.
"We look forward to working with Loblaw to enhance and grow the current network of gas stations."
Brookfield said it would use the Mobil fuel brand under an agreement with Calgary-based Imperial Oil Ltd. (TSX:IMO), a subsidiary of Houston-based ExxonMobil, one of the biggest integrated oil and gas companies in the United States.
Loblaw, Canada's largest operator of grocery and pharmacy stores, is the latest company to divest its gas stations, which have been largely purchased by companies that focus on fuel distribution or convenience stores.
Last year, Imperial Oil sold its remaining 497 Esso retail stations in Canada to five buyers for a total of $2.8 billion.
Among the buyers was Parkland Fuel Corp. of Red Deer, Alta., which acquired Imperial Oil's On the Run/Marche Express convenience store franchise system and 17 Esso stations.
On Tuesday, Parkland (TSX:PKI) announced a $1.5 billion deal to buy Chevron Canada's downstream fuel business, including 129 retail gas stations in the Vancouver area and the Chevron refinery in Burnaby, B.C.
Loblaw said it expects to use proceeds from the sale of its fuel business for its corporate activities.
"This is a positive outcome for our customers, our gas station operators, and our company," said Sarah Davis, the president of Loblaw Companies Ltd., in a news release.