Valero
Energy Corporation is selling its retail business in a transaction that may be worth more than $3.5bn, according to sources within the firm. The retail business operates fuel service stations and
convenience stores across North America, with a network of close to 1000 in the USA and 775
in Canada, and has around $450m in annual earnings before interest,
tax, depreciation and amortization (EBITDA).
Sources close to the mooted transaction said it could sell for 8-10 times EBITDA. As PetrolWorld reported in recent months, the U.S. refining company stated it would split off its fuel retail network, and cited a tax-free spinoff to shareholders as one option. Valero, which is being advised by Credit Suisse Group on the retail split, has sent financial information about the unit to interested parties and is expected to receive initial offers next month(October).
7-Eleven, Alimentation Couche-Tard and Casey's General Stores would be obvious candidates from inside the market sector. It is understood by PetrolWorld that the Carlyle Group LP and TPG Capital LP are also among the potential buyers.
The retail split would allow Valero to focus on its core refining business. It could also generate additional shareholder value since retail businesses similar to Valero's trade at higher valuations than refining companies.
PetrolWorld 28092012
4 - 9 -2012 USA: Valero to Continue With Expansion Despite Retail Split
2 - 8 -2012 USA: Valero Plans Cstore Retail Spin Off