Financial investor Elliott gives Coop a billion-dollar deal with Pronto shops

Very few customers are probably aware of this: with every purchase in a Pronto shop, be it petrol, bread or a chocolate bar, not only Coop earns something, but also the US oil company Phillips 66. This company owns almost half at 49 percent in the joint venture that operates the gas stations and convenience stores.

This will soon be over. As the two business partners recently announced, the Americans are pulling out and selling the retailer their share in the company Coop Mineraloel, which was renamed Coop Pronto at the end of September. Cost of the deal: over one billion francs.

This is one of Coop’s largest acquisitions in a long time. It is more than the 990 million francs for the electronics retailer Fust in 2007 and slightly less than the around 1.5 billion francs for the second half of Transgourmet in 2011.

One may ask why the retailer would pay a hefty sum to buy up a share in a business that it already de facto controls.

Of course, a full takeover gives Coop more flexibility because agreements with the partner are no longer necessary. In addition, Coop will no longer have to pay dividends to Americans in the future. For 2024, these will amount to around 60 million francs.

Coop can easily manage the financing. The investment will be “financed to a significant extent from the operating cash flow,” it said on request. The transaction has no impact on debt.

Either way, Coop probably didn’t have much of a choice.

Because Phillips 66 is urgently looking for money to distribute to shareholders. The Texans are under pressure from activist investor Elliott, who invested in the Houston-based company almost a year ago.

“Monetization events” required

In a letter, Elliott communicated the tariff to the Phillips management: “At the moment,” management still deserves the trust of investors. However, several steps are necessary so that the market continues to believe in the company over the long term.

In addition to the focus on the significantly higher-margin refining business and cost savings, the activists wanted “monetization events”. This explicitly includes the sale of European convenience stores.

And so Phillipps 66 announced in the spring that it was looking for a buyer for the gas station business in Germany and Austria, which runs under the Jet brand. By then it became clear that the oil company would also be looking to exit the joint venture with Coop.

While the sale of Jet is still dragging on, the company management, which is under pressure, has finally been able to announce “significant progress” with the Coop Pronto sale. The goal of bringing in more than $3 billion through divestments has come a little closer.

Esso and Total are already further along

Phillips 66 is one of the laggards among the oil companies with the sale of gas stations and shops. Competitors such as Total and Shell have already divested or reduced these activities or are in the process of doing so. Esso was a pioneer. This name is still emblazoned on German gas stations, but they are operated by the convenience specialist EG Group.

Coop originally brought the American oil company on board because the dealer himself “didn’t know much about the oil business,” as Hansueli Loosli once said. For the strategy with the gas station shops, the Coop boss at the time had to do a lot of convincing not only among the internal skeptics, but also among the Americans. But the concept worked from the start.

Coop does not break down how much of Pronto’s current sales of 2.7 billion francs comes from fuel and heating oil and how much comes from the shops. However, the proportion of shops without a petrol station has grown over the years. With the liberalization of store opening times, Pronto stores have increasingly been opened at train stations and in city centers. Of the 324 locations, 259 operate with a gas station and 65 without a gas station.

Expansion with charging stations – in supermarkets

And the store network is expected to continue to grow: existing and potential locations are constantly being examined. One topic at gas stations is converting to e-mobility. Coop also relies on hydrogen.

But as soon as the parties complete the Pronto sale as expected in the first quarter of 2025 – resistance from the Competition Commission would be surprising – Coop will have to cover any investments itself.

Currently, over 150 locations are equipped with charging stations for electric vehicles, and by the end of 2026 there will be over 200. However, from the customer’s perspective, supermarkets are particularly suitable for installing charging options, says Coop.

This suggests that gas stations will not necessarily be converted from gasoline to electricity supply points in the future. Even if the demise of the internal combustion engine comes later than expected, fuel sales from fuel-efficient engines and hybrid vehicles will decline. Gas station operators have to think all the more about what concepts they can use to get drivers to stop and consume. Retailers can do this better than oil companies.