The partnership between Joe Issa’s Cool Oasis petroleum retail and marketing company and Neal & Massy has acquired Shell Company’s businesses in Jamaica, ending a year-long effort by the Anglo-Dutch company to divest its assets in the island.
The price that the joint company – Cool Petroleum Holdings Limited – paid for the assets, including Shell’s cooking gas company, and its headquarters at Rockfort, Kingston, was not disclosed, but industry experts estimate it at US$180 million.
This would be jut below the US$200 million that Shell got for its eastern Caribbean operation that was bought months ago by businessman Kiffin Simpson, and which was slightly larger than the operation in Jamaica. Shell was seeking over U$200 million for the local operation.
Yesterday, Shell in a statement said the sale involved it commercial fuel, lubricants, liquefied petroleum gas, and chemical businesses, which include 56 retail service stations, 30 per cent of which it owns outright, and its main distribution depot at Rockfort.
The company declined to provide key details of the transaction, including the price and conditions of the sale, but said the acquisition should be fully consummated by year-end.
Bernard Dulal-Whiteway, Neal and Massy’s chief executive officer, said yesterday he was happy with the deal.However, market source say that among the conditions of the deal, is for the new owners to continue buying petroleum from Shell; for the Shell name and livery to be maintained; and for the employees to be automatically offered continuation of employment.
“The acquisition is in keeping with our vision to be a major pan-Caribbean enterprise and aligns us with a creative and entrepreneurial partner in Jamaica, the largest market in the CSME.”
Shell name, workers to remain
Roger Bryan, Shell Jamaica’s chairman, told the Business Observer that several people had bid for the asset, “but Shell carefully chose its partners… Neal and Massy and Cool are companies of good repute.”
In fact, some one dozen companies initially expressed interest, after Shell, which controls 26 per cent of the local petroleum market, started scouting for a buyer a year ago.
The list of suitors was later peeled to three – the French company Total, Cool Oasis/Neal and Massey consortium, and Facey Commodity.
Currently, Cool Oasis brands 32 gas stations – 20 retail outlets and 12 fleet outlets. Issa owns eight of the retail outlets, while others are owned by independent operators and branded by Cool Oasis.
With about seven per cent of the petroleum retail market, the Cool Group would not control 33 per cent, making it the largest petrol retailer in Jamaica – with 88 outlets.
Additionally, Neal & Massy, which owns IGL, and Shell are the number one and two in the market for cooking gas. The merger will create a dominant player in this end of the business.
Shell’s boss told the Business Observer yesterday that “all workers will be offered employment under the same terms and conditions they have now,” and that the willingness of the Cool Petroleum Holdings to do this made it a preferred partner.
However, it was not clear before press time last night, if under Jamaica’s laws, the 140 or so employees will have to be made redundant – as other sources suggested that this may be a requirement, given the change in beneficial ownership of the petroleum company.
Joe Issa could not be reached to provide clarification on this issue.
Nevertheless, the willingness of Cool Holdings to offer the staff immediate employment was a critical factor for Shell.
“These were some of the things we looked for…how the future company would treat its employees and also maintain standard and conduct,” said Bryan.
The Shell chairman also pointed out that while the Shell brand would remain visible in the Jamaican market, the LPG, chemicals and commercial business would be managed under a new brand.
Cool Petroleum is jointly owned by Cool Corp Limited and Neal and Massy, whose ownership is through Industrial Gas Holdings Limited. Neal & Massy is a conglomerate that operates in most of the English-speaking Caribbean and has US$600 million in sales. It employs over 4,000 workers.
Issa, whose Cool Group is a diversified conglomerate – selling from calling time, to clothes, and trucking service, was this year nominated as a Business Observer Business Leader for his role in growing the business he began 10 years ago. Kenny Benjamin, executive chairman of the Guardsman Group, was named the Business Leader.
Yesterday, in a reaction to the sale, the president of the Jamaica Gasoline Retailers Association (JGRA), Trevor Heaven, said he was pleased to know that Cool Oasis and their partners were given the right to operate The Shell locations on the island.
“We (JGRA) would have preferred that they gave the independent dealers the first option to purchase the location, but I guess it’s best when the sale is en bloc because it’s an easier process,” he said.
Heaven said that he was unsure as to what would be the outcome of the sale. “We just have to wait and see what Cool Oasis brings to the table,” he said.
The Business Observer also learned that the Shell members have been called to a meeting today, to discuss the future of the company’s operations.
Picture caption: Joe Issa at the Business Leader Awards in April
Source: The Observer