The oil tycoon tasked with raising funds for Dundee’s landmark V&A design museum and a prominent city businessman have sealed a £500 million takeover deal for a private business venture.
Leading Scottish entrepreneur Alasdair Locke and Dundee and Angus Chamber of Commerce president Tim Allan have worked together for four years to build Motor Fuel Group into the UK’s second-largest independent petrol retailer.
New York-based private equity house Clayton, Dubilier & Rice confirmed it was partnering with the firm’s current management team including Mr Locke and Mr Allan to buy out Patron Capital Partners’ stake in the St Albans-based business.
The management buyout (MBO), which is expected to complete next month, is valued at approximately half a billion pounds.
MFG had 48 properties in its portfolio when Mr Locke the multi-millionaire former head of north-east based oil drilling firm Abbot Group and Mr Allan made their initial investment in the firm and respectively became chairman and non-executive director.
However, MFG’s acquisition by Patron Capital Partners in 2011 heralded a period of rapid expansion for the business as it grew its estate to 288 outlets.
A further 90 Shell stations are currently being added to MFG’s asset base, and annualised sales last year topped £1.25 billion.
The firm which employs thousands of staff across the UK is hopeful that CD&R’s investment will bring further success.
As an immediate result of the deal, former Tesco chief executive and CD&R senior fund adviser Sir Terry Leahy is joining the MFG board.
“MFG is a well-positioned, growing and cash-generative business in a stable industry with an improving competitive environment that favours independent operators,” CD&R partner David Novak said.
“Alasdair Locke and the strong MFG management team have created a valuable portfolio of petrol and convenience retail outlets which we intend to further enhance and expand.”
North-east-based Mr Locke, who in 2011 was installed as chairman of the campaign board established to raise millions of pounds in private funding for the landmark V&A museum project in Dundee, is to continue in his role as chairman of MFG.
“We thank the Patron team for helping us become one of the largest, most dynamic and profitable independent petrol and convenience retail operators in the UK, and we are delighted to be partnering with CD&R,” Mr Locke said.
“The firm’s reputation for operational excellence and deep consumer and retail experience will be especially useful as we move the business forward to the next stage of profitable growth.”
Mr Allan added: “The business had grown and achieved all of its aims with the existing owners, but the opportunity came to continue that strategy and build a bigger business under new ownership.”
Patron senior partner Stephen Green said his firm had been “delighted” with their investment in MFG.
“Together with the management team and Alasdair Locke, we have succeeded in taking a complex property-backed business, driving operational efficiencies and rapidly transforming the company into a stable, profitable operating platform with potential for future growth,” Mr Green said.
“The success of MFG one of our largest investments to date and a highly profitable one highlights the strength of our strategy of investing opportunistically in property-backed investments across Western Europe.”