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BP PLC (LSE:BP) might see an unexpected boost in its value due to recent developments in the takeover battle for Japanese retail giant Seven & I, according to analysis from US bank Citi.
Canadian firm Alimentation Couche-Tard, known for its Circle K convenience stores, has extended a friendly offer to acquire Seven & I. Citi's analysis suggests that this move underscores the often-underappreciated value of retail marketing operations within global integrated oil companies (IOCs).
The analysis highlights a growing trend where petrol forecourts are capturing an increasing share of retail consumer spending. This is partly due to the longer time consumers spend at these stations, especially with the rise of electric vehicles (EVs) which require extended charging periods.
Citi has long argued that the substantial role of IOCs in retail marketing can become a competitive strength amid the ongoing Energy Transition. The firm views Couche-Tard’s willingness to offer a high valuation multiple of 14 times EV/CFFO as a testament to this belief.
BP, which is included on Citi’s European Focus List, is seen as a prime candidate to benefit from this trend. The bank’s recommendation reflects a broader view that the value of retail operations within IOCs may be more significant than previously recognized.
On Thursday, BP’s share price experienced a minor decline of 0.6%, trading at 427.7p. Despite this, the potential strategic advantage offered by BP’s retail marketing segment remains a focal point for those evaluating the company’s future prospects.
