Viva Energy Group Ltd [ASX:VEA], one of Australia’s largest energy companies, experienced a surge in their share price this morning following the announcement of their extended alliance with Coles Group Ltd [ASX:COL].
The companies are well known for their combined involvement in the Coles Express fuel and convenience stations.
At time of writing, Viva’s share price sits at $2.18.
What you need to know about the alliance
Managing Director of VER Manager Pty Ltd and Manager of VVR, Margaret Kennedy, said:
‘We welcome the announcement from VIVA Energy and Coles Group today, particularly in respect of the extension of the Alliance to 2029, the new fuel retailing arrangements and potential network growth opportunities.
‘Viva Energy is the tenant at more than 430 VVR sites across Australia and we look forward to continuing the strong relationship between VVR and Viva Energy.’
This move cements the company as Australia’s leading fuel and convenience business.
Almost six months ago, stakes between the two companies were high as they debated over wholesale petrol prices. As a result, their share price is suffering heavily. Though it seems now that relations are firm for the next 10 years, and investor confidence is again starting to build.
What’s next for Viva Energy’s share price?
The fuel renewal will cost Viva Energy $137 million and will give them the right to set fuel prices. However, Coles will still remain responsible for operating the Coles Express retail stores and will receive a commission per litre at Viva’s Shell filling stations.
‘Together, we represent Australia’s leading fuel and convenience offer and we look forward to growing the Alliance with Coles Express in the years to come,’ Viva Energy chief executive Scott Wyatt said.
The agreement will come into effect from March this year.
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