No-Moat Viva To Buy Coles Express, We Are in Favour Given Reasonable Terms; FVE Unchanged

Australia’s second-largest refined fuel retailer Viva Energy will acquire Coles Express for AUD 300 million, bringing the convenience retail network in-house. We think this makes sense, and accelerates Viva's strategy of transitioning to a fully integrated fuel and convenience retailing model. It could also unlock synergies from the integration of network and store development. Despite this, we retain our AUD 3.20 fair value estimate for no-moat Viva. We think the price fair rather than materially needle-moving. The transaction is expected to complete in the first half of 2023, subject to Australian Competition & Consumer Commission approval, which we expect will be forthcoming.