Puma stalks Woolies and Coles

Motorists could see more competition at the bowser and potentially cheaper fuel, as Swiss-based Puma Energy enters Australia’s service station market.

The company promises better deals amid plans to compete aggressively with service station giants, Coles and Woolworths Limited (ASX: WOW).

Puma, which is owned by global commodity trading firm Trafigura is reported by The Australian to have entered a deal to buy Neumann Petroleum, the owner of the Matilda and Neumann-branded petrol stations. The deal includes 125 stations stretching from Gladtone in Queensland to the Victorian border, as well as a bulk seaboard fuel terminal in Brisbane, and is estimated to be worth more than $250 million.

Puma’s Australian general manager Ray Taylor said that the company’s entry will “bring more robust competition to the country’s petroleum market”.

Coles – owned by Wesfarmers Limited (ASX: WES) and Woolworths own more than 1,000 services stations between them, and the number is growing every year. Both companies entered deals with oil giants, Coles with Shell and Woolies with Caltex Australia (ASX: CTX), to rebrand service stations and expand their offerings beyond fuel, effectively turning them into mini supermarkets.

News media suggests independent fuel retailers, including Newmann, Matilda, 7-Eleven, and On The Run, made up 17% of the $38 billion Australian market.

Puma already has a network of over 1,300 service stations around the world, and has further plans to expand in Australia. A $65 million terminal facility in Mackay is planned to allow further expansion into North Queensland. The company is also on the lookout for other greenfield opportunities and acquisitions to complement the Neumann acquisition.

Foolish takeaway

Puma has a tough task ahead of it. Coles and Woolies are entrenched as the market giants of the fuel/convenience store market, and won’t be lying down. For motorists, more competition is good news and we look forward to having a healthy, competitive fuel market – and cheaper fuel prices.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Woolworths.

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