Julia Rwigamba

Distribution

Vivo Energy, Engen merger spanning 27 Countries in Africa

Vivo Energy and Engen have joined forces to establish a combined group, creating one of Africa's largest energy distribution companies. The merger will give rise to a company with a vast network of over 3,900 service stations and a storage capacity exceeding two billion liters across 27 African nations.

Petronas, the multinational oil and gas corporation, will sell its 74% stake in Engen to Vivo Energy, subject to regulatory approvals and meeting certain conditions.

Vivo Energy CEO Stan Mittelman expresses pride in the company's growth trajectory, having expanded its network by over two-fold since its formation in 2011. In recent years, Vivo Energy acquired the Engen business in nine African markets, diligently working to enhance and develop these operations. Mittelman highlights the potential for even faster growth following Vitol's acquisition of 100% ownership in Vivo Energy last year.

The completion of this transaction will result in the reunification of the Engen brand throughout Africa, marking a significant milestone in Vivo Energy's growth strategy. CEO Stan Mittelman underscores the commitment to the South African market and emphasizes the strengthened portfolio across other key markets.

Engen, which currently operates approximately 1,300 service stations in seven African countries, including South Africa, views this merger as an exciting opportunity to expand its market leadership. Engen CEO and MD Seelan Naidoo emphasizes the advantages of leveraging the company's strong brand equity, extensive retail footprint, efficient supply chain capabilities, and exceptional customer service. Engen aims to contribute significantly to Vivo Energy and Vitol's vision of building a formidable pan-African energy champion.

Vivo Energy, hailed as a success story since its inception, has consistently achieved organic growth and invested in high-quality assets. Chris Bake, the chairperson of Vivo Energy, praises the company's highly skilled management team and their profound understanding of Africa's unique energy needs. The partnership with Engen, South Africa's market leader, is anticipated to bring substantial benefits to customers across the continent.

In the transaction, the Phembani Group, a prominent industrial holding company and longstanding partner of Petronas in Africa, will maintain its association with Engen. As a broad-based black economic empowerment shareholder, the Phembani Group will retain a 21% stake in the South African business. Additionally, the deal includes a newly implemented 5% employee share ownership program, ensuring that 26% of Engen South Africa will be owned by previously disadvantaged parties, thereby benefiting Engen employees.

Phuthuma Nhleko, chairperson and co-founder of the Phembani Group, expresses pride in their long-term partnership with Engen and their contribution to the growth of a valuable South African corporate citizen. Nhleko looks forward to partnering with Vivo Energy in the next phase of Engen's growth, confident that the collaboration will support the realization of Engen's vision.

Written by Julia Rwigamba
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Source : Engineering News - Click Here >>>