Viva Energy (VEA) gets some relief
Stock
Viva Energy (ASX: VEA) $2.18 as at 6/02/2019
Coles (ASX: COL) $12.45 as at 6/02/2019
Event
The struggling petrol station IPO of 2018 has been dealt some respite today with the announcement of a new fuel deal with Coles (ASX: COL). The biggest IPO of 2018, which only briefly traded above its IPO price of $2.50, and traded to a low of $1.66 late last year, has bounced 13% today on news of the 10 year deal with the Coles convenience business.
The new deal changes the relationship from a supply contract into a commission model where Viva will have the pricing power, and Coles will receive a rate on each litre sold.
Viva Energy (ASX: VEA) Chart
The deal ensures each company’s specialty becomes their responsibility, with Coles focusing on convenience for the consumer, and Viva to focus on fuel retailing, aimed at delivering “a more competitive customer offer… and better align contributions and incentives for each party.”
Coles reiterated that convenience remains challenging in the first half with EBIT expected to be $47-$51m for the 6 months, a small portion of the Coles group earnings.
Coles (ASX: COL) Chart
Market Matters Take/Outlook
