Phillips 66 (NYSE: PSX), a leading integrated downstream energy company, announced a strategic agreement to divest a 65% interest in its Germany and Austria retail marketing business, including 843 JET-branded sites, to a consortium owned by Energy Equation Partners and Stonepeak. This divestiture values the business at approximately ‘92.5 billion (equivalent to about $2.8 billion), reflecting an Enterprise Value/EBITDA multiple of 9.1x based on the expected 2025 EBITDA.
The transaction is expected to generate pre-tax cash proceeds of around ‘92.5 billion ($1.6 billion after purchase price adjustments), which Phillips 66 plans to allocate towards debt reduction and enhancing shareholder returns, affirming its commitment to optimizing its asset portfolio for sustainable long-term growth. The deal is slated to close in the second half of 2025, pending regulatory approvals.
This joint venture allows Phillips 66 to retain a non-operated 35% stake in the business, enabling it to benefit from future growth opportunities while monetizing a non-core asset. Moreover, Phillips 66 will maintain a multi-year supply agreement with Mineraloelraffinerie Oberrhein GmbH & Co. KG (MiRO) Refinery for product supply to the divested business.
From a financial perspective, Phillips 66 reported an EBITDA of \(5.985 billion and a net income of \)2.107 billion for FY 2024, underlining the company’s robust financial health to strategically manage such assets and investments. Total liabilities stood at $44.1 billion, indicating manageable leverage levels in the context of this multi-billion dollar divestiture.
This divestiture aligns with Phillips 66’s recent strategic moves, including key acquisitions and mergers in the midstream and marketing segments, notably the acquisition of Pinnacle Midland Parent LLC for $565 million in July 2024 and the DCP Midstream merger, enhancing the company’s midstream asset footprint.
Phillips 66 CEO Mark Lashier emphasized, ‘This transaction advances our strategy to optimize our portfolio and enhances long-term shareholder value. The newly formed joint venture allows us to monetize this non-core asset while retaining the ability to benefit from its future growth.’
Given the scale and strategic nature of this transaction, it underscores Phillips 66’s focus on capital allocation efficiency amidst economic uncertainties, regulatory challenges, and evolving energy markets. Market analysts note that the 9.1x EV/EBITDA multiple reflects a strong investor confidence in the underlying business profitability and growth prospects in Germany and Austria’s retail energy sector.
For further reading, the full 8-K report can be accessed here: https://sec.gov/Archives/edgar/data/1534701/000119312525120396/d834733dex991.htm
Tags: Phillips66Divestiture, GermanyAustriaRetailMarket, EnergyEquationPartnersDeal, MidstreamAcquisitions, StrategicAssetOptimization