Shell's New Zealand assets, including 230 service stations and a stake in the Marsden Point refinery, are expected to fetch more than $NZ1 billion.
Woolworths is one of the few corporates with plenty of cash and backing for acquisitions, and it is openly looking to purchase devalued assets, especially companies with sites spread around the country, ABN Amro Craigs broker Peter McIntyre said yesterday.
"It's crucial to remember that the number of store sites can't be replicated," Mr McIntyre said.
ABN research on Woolworths for 2009 has identified about $A800 million ($NZ1018 billion) cash and securities in hand, and other assets valued at $A3.8 billion.
Woolworths Australia bought Progressive Enterprises, which has a 45% market share in New Zealand, almost three years ago.
It operates the brands Foodtown, Countdown and Woolworths NZ, and Fresh Choice/Super Value.
Last month, Progressive was understood to have purchased a 1.1ha site for a multimillion-dollar South Dunedin development, which coincidentally has a Shell station neighbour, but Progressive would not confirm any details.
Shell wants to sell its 230 New Zealand service stations, its 17% stake in the Marsden Point oil refinery, aviation, bitumen, chemicals, commercial fuel, distribution and supply and marine businesses and 25% holding in the operator of Fly Buys, in a sale it has confirmed will probably exceed $NZ1 billion.
However, the sale is on a lock-stock-and-barrel basis, with Shell not wanting to break up the respective divisions or petrol stations to sell piecemeal.
Mr McIntyre said Shell was selling because New Zealand did not offer it the economic scale of other countries, and in recession times major corporates looking to cut costs would contract back to operations in their homeland.
He said for Woolworths, the Shell petrol stations and Fly Buys were a "natural fit", replicating Australian holdings.
However, the Commerce Commission may not be keen on Woolworths having such a large stake in Fly Buys and gaining control of Shell's about 27% of the fuel market.
"The Commerce Commission is probably happier with the way it stands - the four major [oil] companies in competition," Mr McIntyre said.
The multiple-site attraction for Woolworths was reflected in the 10% blocking stake it maintained in the Warehouse chain in New Zealand, which could at some time lead to a takeover play.
In New Zealand, Shell was continuing with its exploration plans around the country, and would retain its 36% share in roading and infrastructure company Fulton Hogan.
In another similar major corporate move across the Tasman, Exxon Mobil was selling 800 petrol stations, which ABN forecast last year had revenue of $A2.1 billion.
Mr McIntyre said there had been speculation Shell, Woolworths or Wesfarmers could all be considering a bid, following unconfirmed speculation in the Australian Financial Review Exxon may sell its 800 Australian fuel outlets for $A500 million.
