May 15, 2015 / 8:09 PM / 2 years ago

Imperial Oil begins to accept proposals for Esso stations: sources

TORONTO/CALGARY (Reuters) - Imperial Oil Ltd (IMO.TO), Canada’s No. 2 integrated oil producer and refiner, is accepting proposals from interested bidders for 500 of its remaining company-owned Esso retail sites, according to four sources familiar with the process.

Cars pull into an Esso gas station in Richmond Hill, Ontario, January 30, 2015. REUTERS/Mark Blinch

Estimates for the value of the stations have varied widely but could be worth more than C$1 billion ($831 million).

In January Imperial said it was evaluating selling the stations but on Friday said no decision had been made.

Some 1,200 of Imperial’s 1,700 Esso-branded sites operate under a wholesaler model, where the stations are owned by other parties but retain the Esso brand and are supplied by Imperial, which is majority-owned by Exxon Mobil Corp (XOM.N).

Parties interested in the assets include Parkland Fuel Corp (PKI.TO), Alimentation Couche-Tard Inc (ATDb.TO) and CST Brands Inc CST.N, said the sources, who asked not to be named as they have not been cleared to discuss the matter publicly.

All three companies, some of the largest gas station operators in Canada, already operate Esso-branded stations in the country.

Local real estate developers, along with some private equity buyers, are also showing interest in the gas stations, said two of the sources.

Imperial said it has not yet decided whether it will go ahead with a sale of the outlets, stressing the process is still in its early stages.

“This is a detailed process that will take time and careful evaluation before any decisions are made,” Killeen Kelly, a spokeswoman for the company, said in an email.

Parkland, CST and Couche-Tard were not immediately available for comment.

Imperial has broken up the 500 stations into a number of packages, split geographically, the sources said, adding that interested parties can bid on one, several or the whole. It is not clear which parties have bid on the portfolio as a whole or on individual packages.

Since Imperial does not break out specific earnings numbers for the 500 stations, valuation ranges on the assets have swung widely.

First Energy analyst Michael Dunn said these sites could be worth upwards of C$2 million per station, implying that proceeds from the sale could top C$1 billion ($831 million). He noted the assets were largely in densely populated, high-traffic urban areas and many had car washes and Tim Hortons outlets.

Energy companies have been spinning off their gas station assets as they tend to trade at higher multiples on their own and allow their management to focus on their core production and refining operations.

Both Parkland and Couche-Tard have been very acquisitive. In March, Couche-Tard agreed to acquire the retail, commercial fuel and aviation businesses of Royal Dutch Shell Plc (RDSa.L) in Denmark to expand its presence in Scandinavia.

Parkland last year agreed to acquire gas station operator Pioneer Energy, which is part-owned by Suncor Energy Inc (SU.TO), for C$378 million.

Editing by Ted Botha and Lisa Shumaker

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