Puma stalking Coles and Woolies

Independent petrol retailer eyeing $1 billion acquisition of United Petroleum

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published September 4, 2013 1:14 pm AEST

Puma Energy is eyeing an acquisition that could see its share of the petrol retailing market more than double from 4% to 10% and put extra competitive pressure on the major retailers.

Puma, owned by Dutch-based commodities trader Trafigura Beheer, is already Australia's largest independent petrol retailer, after purchasing Ausfuel for $625 million from private equity firm Archer Capital. The Ausfuel deal had 110 retail sites and 11 depots in Western Australia, Northern Territory and South Australia.

That came hot on the heels of the company's acquisition of Neumann Petroleum in January at an estimated cost of more than $250 million. Neumann owned 125 Neumann and Matilda-branded petrol stations along Australia's east coast, as well as a bulk fuel terminal in Brisbane.

Now Puma is interested in United Petroleum, which operates a chain of petrol stations across Australia, as well as fuel import terminals in several states and could sell for as much as $1 billion. United also sells bulk fuel products to other independents, fuel distributors, mining sites and marinas.

Currently Woolworths (ASX:WOW) and Wesfarmers (ASX:WES) owned Coles control around 50% of the petrol market, with Caltex Limited (ASX:CTX) holding 17%. BP, 7-Eleven and the independents share the leftovers.

Coles and Woolworths are already under pressure for the use of petrol shopper dockets from the competition regulator, with Australian Competition and Consumer Commission (ACCC) chairman Rod Sims suggesting the petrol discounts could amount to predatory pricing or abuse of market power. With discounts hitting 40 cents a litre, depending on the size of the customers shopping basket, Mr Sims said that he was concerned that we could see just two companies selling petrol in Australia.

Many associations such as the Australian Retailers Association, Master Grocers Australia and Australian Newsagents have already called on the government to end the petrol shopper docket discount schemes.

Foolish takeaway

More competition would be good for the sector, but it could also result in pushing more of the independents out – similar to the supermarket sector where Woolies, Coles and Metcash (ASX:MTS) backed IGA stores dominate.

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Motley Fool writer/analyst Mike King owns shares in Woolworths.

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