China’s Sinopec will cover rebranding costs in Chevron takeover
Chinese fuel group Sinopec has agreed to contribute at least R315m to rebranding 834 Caltex service stations, in addition to its earlier promise to spend R6bn upgrading the oil refinery in Milnerton, the Competition Commission said on Friday morning.
Sinopec is bidding against Glencore to acquire the Southern African business of US oil company Chevron.
Chevron service station franchisees approached the commission with concerns over the costs in switching brands, as well as over the new owner changing their contracts.
The commission said it had approved Sinopec buying the US oil company’s 75% stake in its Southern African business — the balance is owned by empowerment partners — on condition it contributes to rebranding costs on top of its earlier commitment to invest R6bn upgrading Chevron’s refinery in Cape Town.
"Sinopec will spend approximately R290m to cover the cost of rebranding the 227 service stations falling under Chevron SA’s branded marketer footprint that have been upgraded to the latest Caltex standards, as well as cover the rebranding costs to the Sinopec brand for approximately 353 sites in the three large metropolitan areas outside the branded marketer areas," the commission said on Friday.
"Where the existing branding of certain filling stations falling within the branded marketer programme has not yet been upgraded to the latest Caltex standards, Sinopec must cover a minimum of 20% of the rebranding costs necessary in order to rebrand these service stations in line with Sinopec’s branding.
"For 254 stations that have not yet been upgraded, Sinopec shall cover a minimum of 20% of the rebranding costs at an estimated cost of R25m," the commission said.
Sinopec was also required to commit to not changing the existing agreements Chevron has with its service station franchisees.