Morrisons and Motor Fuel Group are in talks over a £2bn petrol depot deal

Supermarket chain Wm Morrison is in talks for a £2 billion deal. to relieve one of Britain’s biggest petrol forecourt empires.

Sky News has learned that the grocer has opened discussions with Motor Fuel Group (MFG) about a deal, with a deal possible during the autumn.

Both Morrisons and MFG are controlled by private equity firm Clayton Dubilier & Rice (CD&R) and sources said talks were focused on a transaction with an enterprise value of up to £2.5bn.

Morrisons’ fuel retail business comprises around 340 locations, with a further 150 potentially added as the MFG targets the rapid expansion of its ultra-fast electric vehicle (EV) charging network.

Industry sources pointed out that it would replicate a deal being explored between EG Group, the fuel retail giant, and Asda – which are both owned by TDR Capital and Issa brothers Mohsin and Zuber.

These talks eventually culminated in an announcement in May that Asda would take over EG’s UK and Ireland operations.

The news of the talks between Morrisons and MFG comes months after CD&R stopped a potential sale of the latter business.

Banking sources said the deal, if it went ahead, would have benefits for both parties and that it was negotiated from a proactive position, with neither company facing refinancing deadlines before 2027.

The two sides are said to be keen to position the deal as a commercial tie-up, the possibility of which was initially flagged two years ago when CD&R outlined the “potential opportunity for a commercial operational partnership between Morrisons and MFG”.

CD&R’s takeover of Morrisons for 7 billion pound was investigated by competition regulators, partly on the basis of the buyout firm’s existing ownership of MFG.

The Competition and Markets Authority (CMA) ruled that the sale of 87 of MFG’s petrol forecourts would be sufficient to address the concerns.

That agreement has since ended.

The addition of high-quality groceries to fuel retailer sites has made it one of the most intense battlegrounds for UK shoppers in recent years.

However, fuel retailers have come under intense scrutiny from the government and the CMA in recent months as ministers seek ways to ease the cost of living crisis.

In July, the then energy minister, Grant Shapps, said forecourt operators would be forced to publish live prices to give motorists greater transparency.

Discussions between Morrisons and MFG are said to envisage all or the vast majority of the former’s petrol retailers being sold.

“A deal will allow both companies to leverage their strengths, with Morrisons’ pumps operated by MFG, a best-in-class forecourt operator, and the supermarket chain focusing on what it does best – food and retail,” said a person close to the conversations.

It would also, they said, strengthen Morrisons’ ability to invest in its wholesale and convenience offerings as channels for growth.

Additionally, the source said, customers would get better value at the pump because of MFG’s ability to leverage the price advantages of buying bulk fuel “to support a compelling fuel value proposition.”

MFG is believed to have invested £400m in the last decade on its electric charging network.

The city’s advisers have been contacted to work on the deal, which could be announced as early as next month.

CD&R, Morrisons and MFG all declined to comment.

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