St1's growth strategy is based on a strong station network in all countries in which it operates. On 18 December 2014, the company announced its intention to pursue its growth strategy through a business acquisition in which St1 Nordic Oy will buy the share capital of Smart Fuels AS, Shell's Norwegian marketing company from Shell Exploration and Production Holdings B.V. The acquisition is subject to regulatory approval and is expected to be closed during the latter half of 2015. As per the seller's request, the commercial terms will not be disclosed.
The acquisition will increase St1 Nordic's turnover by approximately EUR 2 billion, increasing the group's total turnover to almost EUR 6 billion. Smart Fuels AS company employs c. 200 people. The acquisition will strengthen St1's station network by more than 400 new stations, making the Norwegian network as extensive as its counterparts in Finland and Sweden. Similarly to earlier business acquisitions in Finland and Sweden, the acquisition includes a licensing agreement for the use of the Shell trademark in station operations. In the future, St1 Nordic will operate station networks in all three countries under both the St1 and Shell brands. St1 Nordic already has 39 unmanned St1 stations in the Oslo region.
Through the acquisition, St1 Nordic will also take over Smart Fuel AS's extensive direct sales operations for liquid fuels, which serve industrial, logistics and shipping customers and resellers among others. The company's nationwide liquid fuels terminal network ensures strong logistical competitiveness. A new company will be formed to handle Smart Fuels AS's aviation refuelling operations. This will be an associated company jointly owned by St1 Nordic Oy’s sister company St1 Group Oy and Shell.
St1 will implement its cost-efficient business model in Norway. After achieving efficiency improvements and synergy benefits, it is estimated that St1 Nordic group will surpass EUR 150 million in EBITDA. The acquisition will be financed mainly by existing financial instruments and partly by new facilities. St1 Nordic will also receive equity financing from its owners. When implemented, the business acquisition will bring the group's gearing ratio close to 120 %.
“Our Nordic growth strategy is based on a strong station network in all countries in which we operate. By expanding, we want to attain adequate volumes and scale to our business, in order to strengthen operational profitability. The acquisition of Shell’s Norwegian downstream company supports our strategic objective of becoming the leading producer and seller of CO2-aware energy, because the retail sale of liquid fuels enables substantial investments in our renewable energy projects,” says Kim Wiio, CEO of St1 Nordic.
St1 Nordic Oy
St1 Nordic focuses on fuels marketing activities in Finland, Sweden and Norway and on renewable energy solutions such as waste-based ethanol fuels and industrial wind power.
St1 Nordic’s annual turnover increased to almost 4 billion euros as the transfer of all fuels marketing business from St1 Group to St1 Nordic was completed in 2014. The sister group St1 Group now focuses on oil refining.