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Vitol Agrees to Buy Rest of Vivo Energy in $2.3 Billion Deal

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(Bloomberg) -- A fund backed by trading giant Vitol Group agreed to buy Vivo Energy in a deal valuing the Africa-focused fuel retailer at about $2.3 billion.

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The transaction will bring Vivo assets back in house for the oil trader, which sold shares in the retailer in 2018 in what was one of the biggest initial public offerings on the London Stock Exchange that year. The offer shows Vitol is willing to spend to pursue growth and find outlets for its traditional fuels amid the energy transition.

Vitol, which owns 36% of Vivo, will pay $1.85 (139 pence) a share in cash for the rest, the trading house said Thursday. No. 2 investor and co-founder Helios Investment Partners also supports the deal, Vitol said.

The offer is being made by an entity indirectly owned by Vitol Investment Partnership II Limited. The VIP investment vehicle is managed by Vitol executives and has previously been used to buy assets including refineries and fuel stations in Australia.

VIP II backers in the past have included funds related to George Soros’ Quantum Partners, the Abu Dhabi Investment Council and Saudi Arabia’s Olayan Group, according to its most recent corporate filings in Jersey.

Vitol has committed to fund 47.5% of the investments made by VIP II.

Vivo jumped as much as 21% in London trading, the biggest intraday gain since April last year, and was up 19.4% at 133 pence as of 12:04 p.m. local time. The IPO had been priced at 165 pence a share.

Vitol is searching for areas of growth in its oil-trading business as Western consumers gradually shift to electric vehicles and cleaner fuels. The world’s biggest independent oil trader handles more than 7 million barrels of crude and products a day.

“Fuels distribution and marketing in Africa remains a core activity for the Vitol Group,” it said in a statement. “Vivo will benefit from Vitol’s expertise and be better placed to pursue opportunities in a highly fragmented market.”

The friendly deal with Vivo, which sells Shell and Engen-branded fuels and lubricants across more than 20 countries in Africa, represents one of Vitol’s larger purchases. The trader recently invested $3.5 billion as part of a group buying 5% of Russia’s Vostok oil field in the Arctic.

Earlier Bids

Thursday’s documents reveal that this isn’t the first takeover approach Vitol has made to Vivo’s board. It offered $1.55 per share in February, but that was rejected by Vivo’s independent directors. In September, Vitol made another bid and told Vivo that private equity firm Helios, with which it founded Vivo in 2011, had agreed to sell its 27.1% stake.

As Vitol already owned 36% and would soon control a majority of shares, Vivo’s board held talks with the firm to “negotiate a fair value for the minority Vivo shareholders,” according to the statement. Vivo’s board has recommended shareholders vote in favor of the current offer.

Vitol, like many of its peers, has also stepped up investments in cleaner energy, spending more than $1 billion on solar, wind and other renewables assets, plus carbon capture. Yet traditional fuels still represent the lion’s share of its business, which posted record profits of around $3 billion in 2020 amid wild swings in the price of oil.

(Updates with details on Vitol investment vehicle from fourth paragraph.)

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