Canada's second-largest oil producer, Imperial Oil (IMO - Get Report) , struck deals to sell 497 Esso-branded gas stations for C$2.8 billion ($2.09 billion) as it retreats from retailing to focus on its oil sands and refining operations.
Imperial, which is majority owned by Exxon Mobil (XOM - Get Report) , will sell the sites to five companies led by Quebec's Alimentation Couche-Tard (ANCUF) , which said it will pay C$1.7 billion for 279 gas stations in Ontario and Quebec.
The other buyers were 7-Eleven, which will take over operations in Alberta and British Columbia; Parkland Fuel (PKIUF) , which will buy the Saskatchewan and Manitoba networks, Wilson Fuel for sites in Nova Scotia and Newfoundland; and Harnois Groupe in Quebec.
Imperial Oil has been looking for buyers for its retail network since January last year in order to focus capital on upstream and refining operations and conserve cash amid a more-than-50% decline in oil prices to below $40 a barrel. Imperial's oil output grew significantly last year after an expansion of its Kearl oil sands operation in northern Alberta came online and it began pumping oil from its new Nabiye development, also in Alberta.
Under the terms of the gas station deal, Imperial will continue to supply oil to the retailers. "We believe these agreements represent the best way for Imperial to grow in the highly competitive fuels marketing business," Imperial Chairman Rich Kruger said in a statement.
For Couche-Tard, the deal represents a second major expansion of its global network in quick succession, following its December agreement to buy 464 Irish gas stations owned by Topaz Energy for an undisclosed fee. Couche-Tard said it will finance the Canadian acquisition using existing cash and credit facilities.
"The (Canadian) sites we would acquire represent an excellent strategic fit for our business," said President and CEO Brian Hannasch.
Imperial said it expects the deals to close before the end of the year. Exxon owns 69.6% of Imperial.