CD&R Weighs IPO of Gas Station Operator Motor Fuel Group

CD&R Weighs IPO of Gas Station Operator Motor Fuel Group

Clayton Dubilier & Rice is considering an initial public offering of Motor Fuel Group Ltd., one of the U.K.’s largest independent gas station operators, according to people familiar with the matter. 

The private equity firm is speaking with potential advisers about listing that could value the business, also known as MFG, at more than 5 billion pounds ($6.8 billion), the people said, asking not to be identified discussing confidential information. 

Deliberations are in the early stages and no final decisions have been made, the people said. CD&R, which is competing to acquire U.K. grocer Wm Morrison Supermarkets Plc, could also consider a sale, the people said. A representative for CD&R declined to comment, while a spokesperson for MFG didn’t immediately respond to request for comment.

CD&R’s deliberations over MFG come amid a period of heightened deal activity involving forecourt operators. 

TDR Capital-backed EG Group Ltd., one of the world’s largest independent gas-station and convenience-store chains, is exploring a possible sale that could value the business at about $15 billion, Bloomberg News reported this month. Seven & i Holdings Co., the Japanese company that controls 7-Eleven, completed its $21 billion purchase of Marathon Petroleum Corp.’s Speedway gas stations in May. 

Investors behind forecourt operators have also been looking to acquire supermarket chains to drive synergies across the two businesses. Alimentation Couche-Tard Inc., the Canadian owner of forecourt operator Circle K, made a failed attempt to buy French grocer Carrefour SA earlier this year. In late 2020, Asda Group Ltd. looked at selling some of its gas stations to EG Group, whose owners had just agreed a separate deal to buy the U.K. grocer.

MFG has more than 900 stations operating in the U.K. under major oil brands including BP Plc and Esso, according to its website. The business saw normalized earnings before interest, tax, depreciation and amortization rise 16.7% to 299.2 million pounds last year. 

The U.K. is in the midst of a fuel shortage that has seen many gas stations run dry and caused anguish and disruption for motorists.Prime Minister Boris Johnson said on Tuesday that supplies were returning to forecourts and that the situation was stabilizing. About 37% of service stations represented by the U.K. Petrol Retailers Association reported being out of fuel on Tuesday morning, compared with more than 50% on Sunday.

Like other retailers, MFG is preparing for the transition away from fossil fuels. It plans to roll out more charging hubs for electric vehicles as it shifts to a dual fuel strategy over the coming decades.

©2021 Bloomberg L.P.