7-Eleven acquires Mobil’s retail fuel business

Convenience store and petrol chain 7-Eleven has acquired the retail fuels business of Mobil Oil Australia, with 295 stores to come under the chain’s control.

The deal comes after the Australian Competition and Consumer Commission blocked a $300 million bid from oil giant Caltex to purchase Mobile’s stores, saying it would hinder competition and drive up petrol prices.

7-Eleven Australia chairman Russell Withers said in a statement the decision will increase its total number of stores to over 650, and will produce more than 160 million transactions each year in total.

“As a family-owned business that has been operating 7-Eleven in Australia for 33 years, we are very excited about this acquisition and welcome the Mobil metropolitan retail fuels business and its employees into our group.

“The acquisition combines two successful companies with high-calibre workforces to make a stronger organisation focused on growth, our customers and our employees.”

Chief executive Warren Wilmot also said the company hopes to convert most of the Mobil sites to 7-Eleven stores by the end of 2011, with some sites to be “significantly upgraded”.

Additionally, he said existing franchisees will be delivered a benefit through improvements in supply-chain efficiencies and greater marketing and buying power.

The company also said it will begin to take on new franchisees as part of the process, with “most stores to be progressively franchised”. Existing Mobil Agents will have the chance to acquire a franchise.

The company said the merged entity will produce sales in excess of $2.84 billion. An agreement has already been reached with Mobil for the ongoing supply of fuel.

There are about 30 stores in South Australia included in the transaction, but 7-Eleven said it intends to transfer these stores to the Peregrine Corporation as it does not operate in the state.

Peregrine, owned by the Shahin family, said in a statement the family-owned retail business operates several stores under its “On the Run” brand. Each Mobil store acquired through the new deal will be converted to this brand.

Several other businesses are usually included in these locations, including Subways and Brumby’s Bakery locations. Executive director Yasser Shahin said the company has been presented an “exciting opportunity”.

Wilmot said in his statement that “very little will change” for employees, even though a number of companies will begin to be upgraded to the 7-Eleven brand.

“With 38,000 stores globally, 7-Eleven is the world’s largest retail store brand. A proven franchise system and the great employee talent at both companies provide us our recipe for continued success and leadership in the convenience retailing sector.”

While the company said the acquisition is not subject to ACCC approval, it expects the regulator to conduct a thorough market review.