details of the deal with shell
COLES MYER LTD. 2003-05-27 ASX-SIGNAL-G HOMEX - Melbourne +++++++++++++++++++++++++ HOW WILL THE ALLIANCE WORK
* The Alliance between Coles Myer Ltd (CML) and Shell involves a wholly owned subsidiary of CML becoming the operator of Shell's core retail property network of 584 service stations.
* CML will purchase the rights to operate Shell sites from multi site franchisees for a total amount less than $100 million.
* It is planned to commence at more than 150 service stations in Victoria in July 2003. Given a successful Victorian rollout, a national rollout is expected to be completed by mid calendar 2004.
* The service stations will be co-branded Coles Express and Shell.
* The CML subsidiary will operate these service stations and directly employ the service station staff under a newly established Petrol and Convenience Store Division.
* CML will also introduce a fuel discount offer to its Coles, Bi-Lo and Liquorland customers that will provide a cents per litre discount off already competitive pump prices.
* Discounts will be offered to Coles, Bi-Lo and Liquorland customers.
* Both members of the Alliance have a shared interest in maintaining competitive pump prices this is critical in driving sales.
Using its retail expertise, CML will continue to develop a quality convenience store offer.
* CML will set fuel and shop prices at each of the service stations it operates.
* Shell will be the exclusive fuel supplier and provide the service station property.
HOW CUSTOMERS WILL BE THE WINNERS When the Alliance is fully rolled out:
* Coles Myer customers will receive a cents per litre discount on fuel purchased from Alliance sites. Discounts will be offered to Coles, Bi-Lo and Liquorland customers.
* The discount will apply when customers pass a purchase threshold at Coles, Bi-Lo and Liquorland and will be redeemable when they produce their docket at an Alliance service station. (Note: the spend threshold and the size of the discount may vary.)
* Alliance service stations will be conveniently located more than 80% of CML supermarkets (Coles and Bi-Lo) will be within 5km of an Alliance site.
* Alliance customers will benefit from high quality Shell fuels provided at already competitive pump prices from the conveniently located national network of 584 service stations.
* The Alliance will provide a comprehensive national network so Coles Myer's food and liquor customers have the opportunity to receive a discount on fuel when they travel throughout Australia.
From day one of the Alliance:
* CML customers will have access to highly respected Shell fuel brands including Shell Optimax at Alliance sites.
* Fly Buys customers will receive Fly Buys points at CML supermarkets and for fuel and convenience stores purchases at Alliance sites.
* CML will use its retailing experience and economies of scale to provide a quality convenience store offer.
* Customers will be able to continue to use their Shell Card at Alliance sites. However, Shell Card customers will not be entitled to receive the CML fuel discount as they already have a specially contracted fuel price with Shell which recognises their significant purchase volumes.
HOW GROCERY AND PETROL RETAILING COMPETITION WILL INCREASE
* The Alliance will be pro-competitive and extend the availability of fuel discount offers to more consumers.
* Alliance service stations will continue to have competitive pump prices which are viewed as critical to attracting and retaining customers.
* A significant additional benefit to consumers is the fuel discount offer which will be available to Coles, Bi-Lo and Liquorland supermarket customers.
* Shell's wholesale fuel supply arrangements to other commercial customers and independent retailers will be unaffected by the Alliance.
* The Alliance will increase competition in the supermarket sector now and in the future by allowing CML to respond directly to discount fuel programs operated by other retailers.
THE NEW ALLIANCE NETWORK DETAILS When the Alliance is fully rolled out:
* Accessibility for Coles Myer customers to the discount petrol offer will be hard to match it is designed to be the largest and most convenient discount fuel offer in Australia.
* More than 80% of CML supermarkets (Coles and Bi-Lo) will be within 5 kilometres of an Alliance site. Liquorland customers will also be offered a discount.
Proposed Alliance site numbers are:
STATE COLES BI-LO ALLIANCE SERVICE SUPERMARKETS SUPERMARKETS STATIONS NSW (inc ACT) 143 67 183 NT 4 3 10 QLD 92 35 119 SA 35 40 37 TAS 14 15 VIC 112 48 158 WA 79 62 479 193 584
BACKGROUND ON COLES MYER AND SHELL
The Alliance participants are subsidiaries of Coles Myer Ltd and Shell Australia Limited respectively.
COLES MYER LTD. (CML)
Coles Myer operates eight of Australia's favourite retail brands across 1800 stores throughout Australia and New Zealand.
These include traditional department stores (Myer Grace Bros) and discount department stores (Target and Kmart), supermarkets (Coles and Bi-Lo), liquor retailing (Liquorland, Vintage Cellars and Quaffers), office supplies (Officeworks, Viking), direct marketing and electronic retail businesses.
CML, one of Australia's leading retail businesses, trace its origins back to one of Australia's foremost retailers G J Coles (est 1914) and the Myer Emporium (est 1900). The two companies merged in 1985.
CML employs 164,000 people.
SHELL AUSTRALIA LIMITED
Shell Australia Limited is a wholly owned subsidiary of the Royal Dutch/Shell Group of Companies. Shell has operated in Australia since 1901. It directly employs approximately 2200 people.
Shell operates an upstream oil and gas business, Shell Development Australia Ltd, as well as a downstream oil products business. Shell's oil products business includes:
* Refineries at Clyde (NSW) and Geelong (VIC) representing about 25% of Australia's refining capacity;
* National storage and distribution facilities;
* Commercial marketing activities which supply petroleum products to commercial end users and more than 1000 wholesalers and independent retailers;
* A national property network of 584 company-owned or leased retail service stations which are currently operated under franchise agreements. It is these service stations that will be the subject of the Alliance.
A copy of the full announcement, including Maps, is available in PDF format on www.asx.com.au. Alternatively it is available for purchase from ASX Customer Service on 1 300 300 279.
CML Price at posting:
0.0¢ Sentiment: None Disclosure: Held
