Africa fuels and lubricants supplier Vivo Energy agreed last week to a $2.3 billion buyout by Netherlands-based energy trader and marketer Vitol Group.
The deal gives Vitol an opportunity to gain sole ownership of a business that distributes fuels and Shell- and Engen-branded lubricants throughout much of Africa.
Vitol has been a shareholder in Vivo since the latter was created in 2011 as part of energy giant Shell’s plan to sell downstream operations in Africa. Originally Vivo was a joint venture between Vitol, Shell and Helios Investment Partners, a private equity firm based in London but operating in Africa.
In 2017 Helios and Vitol bought out Shell’s stake in a deal that called for the joint venture to continue supplying Shell lubricants across much of Africa. The following year Vitol and Helios conducted an initial public stock offering that sold 30% of stock shares in the joint venture.
In last week’s announcement of the new buyout agreement, Vitol and Helios disclosed that Vitol made an unsolicited offer in February of this year to buy out Helios’ 27% share in Vivo for U.S. $1.55 per share. Helios denied that offer, but Vitol submitted a new offer in September. The Nov. 25 announcement did not specify the price of that offer, but the companies eventually agreed that it would be for $1.79 per share – a 25% premium on the value at which the stock traded the previous day.
According to the announcement, Helios was inclined to accept the September offer, but expressed concern that by giving Vitol a controlling share of the company – Vitol currently owns 36% of Vivo – it would disadvantage private stockholders. As a result, the companies negotiated for the offer to be extended to all owners of all stock shares not already owned by Vitol.
As of 2018, Vivo operated blending plants in Ghana, Guinea, Cote d’Ivoire, Kenya, Morocco and Tunisia, distributed lubes in 23 of Africa’s 54 nations and exported to a number of others. It also operates more than 2,400 fuel stations across those 23 nations.
Vitol is an independent energy marketing and trading company that reported revenue of $140 billion in 2020 and traded 339 million metric tons of crude oil and oil products the same year. Vitol’s core business does not supply lubricants, but it owns Turkish fuels and lubes supplier Petrol Ofisi and has a 25% stake in Pakistani fuels and lubricants producer Hascol.