The Saudi oil company Aramco, the world’s largest in its industry and the third most valuable company in the world, has landed in Chile after taking over 100% of Esmax Distribución SpA, which operates fuel distributor Petrobras in the country. South American. It is the $2.19 billion Saudi Arabian company’s first foray into the South American retail market.
The transaction was reported this Friday by the Financial Markets Commission (CMF), the Chilean authority that oversees the securities market in Chile. Esmax was owned by Southern Cross Group, a private equity firm specializing in Latin America, which controlled the Petrobras stations through the investment fund Ameris Private Equity Fund. Esmax’s presence in Chile includes retail gas stations, airport operations, fuel distribution terminals and a lubricant blending plant.
Aramco’s entry into the South American country marks the Saudi giant’s entry into the region with the aim of continuing expansion in other countries. In addition, the transaction will allow the oil major to secure sales points for its refined products and develop new market opportunities for Valvoline-branded lubricants, following the Saudi state-owned company’s acquisition of global products company Valvoline Inc. in February this year.
“This agreement is another milestone in our strategy to expand Aramco’s presence globally and grow our retail, lubricants and trading businesses. We are excited about the opportunities it offers, creating synergies with our extensive trading and manufacturing systems. In addition, a platform will be created to introduce the Aramco brand more broadly in both Chile and South America, unlocking significant potential to open up new markets for our products. “Esmax is a well-managed company in Chile with more than 100 years of experience with high-quality assets and growth potential,” said Mohammed Y. Al Qahtani, President of Aramco Downstream. He added: “We are pleased to have Esmax’s outstanding employees join the Aramco family as we continue to execute on our strategy.”
Jaime Besa, Partner at Southern Cross Group, said: “Aramco’s entry into Chile reflects the confidence that Saudi Arabia has in the country by using it as a spearhead for its South American expansion, and also provides the opportunity to to promote relations between the two countries.” ”
The agreement between Southern Cross and Aramco stipulates that the Chilean company will retain ownership of 95 real estate sites where gas stations operate and lease them to the Saudi company under long-term contracts. In addition, the company will maintain on its property the aircraft fuel storage facility located at Santiago International Airport.
In any case, the transaction still has to pass the filter of the antitrust authorities in Chile. This was clarified by the general director of Esmax Distribución SpA, Carlos Larrain Mery, who explained that the sale “is subject to the usual conditions for this type of transaction, such as obtaining authorizations from the relevant free competition authorities, including the Public Prosecutor’s Office.” National Economy (FNE)”. The parties involved assume that this phase could be completed in the fourth quarter of 2023.
The amounts of the operation have not yet been disclosed, but according to information from the Chilean newspaper La Tercera, Southern Cross wanted to raise at least $900 million through the sale of Esmax in 2022. The Latin American company had been putting its fuel businesses up for sale through a mandate to Bank of America since at least June last year. In doing so, Southern Cross hoped to liquidate one of the companies that had grown the most in its investment portfolio in recent years since it bought Petrobras’ assets for $470 million in 2016. In 2022, Esmax recorded sales of the equivalent of $2.5 billion and a profit of $57.7 million.