Musgrave, the grocery wholesaler, and industrial holding group DCC are preparing a joint approach for the Statoil network of filling stations, according to senior market sources.
As many as 20 groups expressed tentative interest in the Statoil business when it was put up for sale in February and the second phase of the process is likely to conclude next month with the selection of a shortlist of about three groups.
DCC and Musgrave have been mentioned before as bidders, but not together. While it is unclear whether they would co-finance a bid, sources with knowledge of the two groups believe that each offers clear advantages to the other in the context of the Statoil sale.
Musgrave, which has no background in the fuel industry, would supply the grocery and newsagent side of the Statoil offering, a trade similar to its Centra convenience store business. That would complement the expertise within DCC, which sells oil products in Ireland and Britain.
Neither group would discuss the Statoil process yesterday.
"Musgrave will not comment on rumours," said a spokesman for the Cork-based group. "DCC's policy is not to comment on speculation," said its spokesman.
Those still in the race for the Statoil business include Petrogas, owner of the Applegreen filling station network, and Tedcastle Holdings, which operates a network of garages.
Maxol and Sweeney Oil are also said to have run the rule over Statoil.
Other groups mentioned in connection with the sale include Tesco, which is believed to be looking at part of the portfolio. However, Statoil wants to sell the business as a single entity with its workforce intact.
Topaz, the Ion Equity-backed group that spent about €180 million buying the Shell network last year, is also in the race. It is acknowledged within the industry that competition concerns about the concentration of garage ownership may preclude Topaz from buying Statoil.
Merrill Lynch in London is managing the sale process.
Statoil employs 1,100 people in a business comprising 69 company-owned service stations, supply contracts with another 167 outlets, fuel terminals in Dublin, Cork and Galway, and interests in a number of smaller heating oil supply companies.
Statoil claims to be the biggest motor fuel retailer in the State with 20 per cent of the market, but profit margins in the business are notoriously low.
While results for 2005 are not yet publicly available, the company had pretax losses of €2.78 million in 2004 on group turnover of €1.07 billion. Operating profits of €1.09 million were recorded after an exceptional charge of €6.5 million for a severance package.
Statoil does not have outright ownership of many of its company-run service stations. This means that an acquirer of the business will not be able to close them down and use the sites for developments. That was a factor in the Shell sale.
