Australia's Woolworths Limited has entered into an agreement to sell its fuel business to British oil and gas company BP for A$1.785bn (£1.046bn; $1.29bn).
As part of the deal, Woolworths will sell 527 fuel stations and 16 committed development sites. The Bella Vista, Australia, headquartered company said the proceeds from the sale will be used to strengthen its balance sheet and reinvest in its core grocery retail businesses.
While the deal is expected to close not earlier than 2 January, 2018, it is subject to customary terms and conditions. These include BP having to get approvals from the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB).
The fuel business had sales of A$4.61bn in FY16, while earnings before interest and tax (EBIT) before significant items came in at A$117.8m.
Subject to conditions, Woolworths also plans to enter into a long-term strategic partnership with BP. This would be designed to leverage its successful and growing "Metro" format, facilitate the preservation and continuation of its 4cpl fuel discount offer and extend its rewards programme.
The partnership would allow for the development of a world class convenience store offering the strength and expertise of both the companies. The potential partnership would be designed such that it enhances the value for its customers and reward them for their loyalty and support.
The deal comes just days after BP struck a $1bn (£814m) deal to drill for gas in Mauritania and Senegal. It also follows BP approving a $9bn Mad Dog offshore project in the US, suggesting it is looking to expand across various domains.
Woolworths CEO Brad Banducci said in a statement: "This transaction is a win for Woolworths customers and shareholders. For our shareholders, once the Strategic Partnership is established, it will result in Woolworths having a larger platform for our redemption and reward programme, as well as providing us with a unique opportunity to partner with and draw on BP's success in rolling out market-leading convenience food offers globally."
BP's Australian president Andy Holmes said: "We are excited to bring BP's global expertise and success in food and convenience offers to Australia through this partnership with Woolworths. Around the world we have delivered leading offers like this via long-term partnerships with other leading food and grocery retailers including Marks & Spencer in the UK and REWE in Germany."