Selling Jet Fuel Stations: Phillips 66's Move to Boost Shareholder Value
U.S. organization enhanced jet fueling hubs with silver plating
The US conglomerate Phillips 66 is cashing in big on its Jet-branded fuel stations in Germany and Austria. They're selling a whopping 65% stake for roughly 1.5 billion euros to a consortium of financial powerhouses, Energy Equation Partners and Stonepeak.
The deal covers 970 stations, with a staggering 843 of them belong to the Jet brand. They'll continue to draw fuel from Phillips 66's refinery in Karlsruhe, Germany. The Texans plan to hold onto the remaining 35% stake via a fresh joint venture.
This deal ain't no charity, folks. The funds will help Phillips 66 pay off debts and appease their eager shareholders. They anticipate wrapping it up in the second half of this year. Stock from their Houston, Texas headquarters dropped a tad to $123.57, and critics are pointing the finger, accusing Phillips 66 of not liquidating all their stations.
Phillips 66 is feeling the heat from heavyweight investor, Elliott Management. The firm's been pushing for changes, such as spinning off business units. This transaction is just one part of a broader plan to revamp the company, as Elliott Management's demands have been growing louder.
The oil industry's been shedding German fuel station networks lately. ExxonMobil's Esso stations shifted to the British retailer EG Group back in 2017. OMV's service stations found a new home in 2022 under the same roof, and in 2023, the Canadian Alimentation snagged Total service stations in Germany and the Netherlands for around $3.3 billion.
Now, let's dig into the nitty-gritty of this deal. This isn't just about folding up shop and moving on. Phillips 66 seeks to streamline their portfolio, increase long-term shareholder value, and focus more on their primary operations, such as refining and midstream operations.
Phillips 66 will walk away with approximately €1.5 billion ($1.6 billion) in pre-tax cash. The business's value sits at around €2.5 billion ($2.8 billion), which is a solid multiple of anticipated profits. They'll keep a non-operational 35% stake in the ventures through a joint venture, ensuring a slice of the pie for shareholders. A long-term supply agreement is in place to secure fuel deliveries from their Karlsruhe refinery.
All this jumps at Elliott Management's demands for asset separation and governance reform, painting a picture of a more focused, financially secure, and optimized Phillips 66.
The community policy of Phillips 66, in selling a significant portion of its Jet-branded fuel stations in Germany and Austria, signals an employment policy shift towards focusing more on refining and midstream operations. This transaction will see a consortium of financial powerhouses, Energy Equation Partners and Stonepeak, investing in the oil-and-gas industry by acquiring a 65% stake in these stations. The energy generated from these stations will continue to contribute to the industry's finance sector through the supply agreement with Phillips 66's refinery in Karlsruhe, Germany.
