Motor Fuel Group (MFG), one of Britain’s biggest independent petrol retailers, is hatching plans for a £2.5bn merger with MRH GB, a rival operator.
Sky News has learnt that MFG, which is backed by the private equity firm Clayton Dubilier & Rice (CDR), is preparing to table a takeover bid next week for MRH.
A merger would create a fuel retailing powerhouse with almost 900 forecourts across the UK.
MFG is likely to face competition to buy MRH, which is also pursuing plans for a stock market listing later this year, according to City sources.
Rival bidders for MRH could include Euro Garages, another large independent operator, or a new entrant from North America, they added.
The Texan private equity firm Lone Star Funds has set a deadline of Monday for offers, and is said to be seeking about £1.2bn for the company.
MRH trades from about 450 sites, which are largely branded under the BP, Esso, Shell or Torq names, and include retail partners such as Costa, Greggs and Subway.
Its suitor, MFG, has almost 440 stations trading as BP, Shell, Texaco and JET, as well as a Murco-branded dealer network encompassing 190 stations in England, Scotland and Wales.
Lone Star has owned MRH since 2016, and last year hired bankers at Citi, JPMorgan and Numis Securities to oversee a public listing of the company.
Buoyant stock market valuations mean that a float remains a strong possibility, although a bidder such as MFG would be able to identify considerable cost-savings and growth opportunities from a merger.
“MRH and its shareholder are currently assessing a range of strategic options which may include a potential Initial Public Offering (IPO),” the company said in a statement.
“No decisions have been made and there can be no certainty that any process will be formalised.”
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CDR has made a string of successful investments in British retailers and automotive-related businesses, including the discount chain B&M and the online vehicle auctioneer BCA.
A spokesman for CDR declined to comment on Friday.