3 Min Read
FRANKFURT/VIENNA (Reuters) - Austrian energy group OMV (OMVV.VI) said it agreed to sell its Turkish fuel supply and distribution unit Petrol Ofisi to Vitol Investment Partnership, managed by the Swiss-based commodities firm Vitol VITOLV.UL, for 1.37 billion euros ($1.45 billion).
Saudi Aramco and the State Oil Company of Azerbaijan (SOCAR) had also placed bids for Petrol Ofisi, sources familiar with the matter said. OMV counted the Turkish petrol station chain as one of its non-core assets it is shedding to generate cash.
Based on the purchase price, OMV will record an impairment of 186 million euros in its fourth-quarter financial accounts, in addition to the 148 million euros recorded as of end-December when it reclassified the unit as held for sale, OMV said late on Friday.
The deal, which is subject to regulatory approval, is expected to close in the third quarter at the latest, at which point a negative foreign exchange rate effect of around 1.1 billion euros will hit OMV's net profit, the company said.
"This stems from the negative development of the Turkish Lira against the Euro since the acquisition of OMV Petrol Ofisi A.S in 2010. This does not affect OMV Group equity since corresponding currency exchange translation effects were directly charged to OMV group equity in prior periods."
Turkey has some of the highest fuel prices in Europe but taxes and other regulations leave little margin for profit for the 70 different retailers.
In 2016, Petrol Ofisi was market leader with a 23 percent share, selling 10.68 million tonnes of fuel, OMV and Vitol said in statements. In 2015, it generated sales of around 10 billion euros, OMV has said.
Petrol Ofisi operates around 1,700 petrol stations. It also has one mineral oil factory, 11 fuel and three liquid petroleum gas (LPG) terminals and more than 1.17 million cubic meters of storage capacity, according to its website.
"This is a strong business in a growing market. We... greatly look forward to working with the Petrol Ofisi team to capitalize on Turkey's strong economic performance and growing demand for energy products," said Vitol Chief Executive Ian Taylor.
Reporting by Maria Sheahan and Shadia Nasralla; editing by Grant McCool