Colony Capital, the US private equity group, on Wednesday clinched a deal to pay €2.6bn ($3.5bn) for a majority stake in Tamoil, the European refining and service station group owned by the Libyan government.
The deal could herald further refinery sales in Europe, as the major oil companies try to offload their less profitable assets.
Colony, which is based in California and run by billionaire investor Thomas Barrack, will control Tamoil through a 65 per cent stake after emerging with the winning bid in an auction that has been running since 2005.
The Libyan government, which has sought to sell several state-owned businesses following the lifting of US and UN sanctions on the country, will retain the remaining 35 per cent stake.
The acquisition by Colony highlights how cash-rich private equity groups are competing for assets around the globe, and are increasingly able to seal transactions in politically sensitive areas such as energy.
Tamoil operates more than 3,000 service stations in Europe, with refineries in Italy, Switzerland and Germany.
Andrew Bradley of Wood Mackenzie, a consultancy, said the valuation being placed on Tamoil looked high, and the deal was “quite an aggressive move” by Colony.
In a recent report, Booz Allen Hamilton, another consultancy, said Tamoil had “a weak competitive position in refining in Europe, both in terms of sophistication and scale.”
Mr Bradley suggested one justification for the price could be if Colony planned further deals. “Maybe it wants to play the integration game, and has some ideas about making a much bigger business.”
The tightness of refinery capacity in the US and disruption in Venezuela and Nigeria have driven petrol prices higher on both sides of the Atlantic, boosting refineries’ profit margins.
But in the longer term, the industry sees Asia as the most important growth market, and oil companies are trying to maximise the efficiency of their European refineries. Royal Dutch Shell, for example, is reviewing its French refineries with a view to selling them.
In a statement, Colony said Mr Barrack and AM Zlitni, Libya’s deputy prime minister, agreed the deal, which was overseen by Shokri Ghanem, chairman of Libya’s National Oil Corporation.
Mr Barrack founded Colony in 1991 after serving as deputy undersecretary of the interior and working for Texas billionaire investor Robert Bass alongside David Bonderman, the buy-out veteran who runs TPG Capital.
This year, Mr Barrack lined up with French billionaire Bernard Arnault to take a 9.8 per cent stake in Carrefour, the French retailer, and sealed a deal to take Station Casinos of the US private in a $5.5bn deal.
Mr Barrack’s strong ties to the Middle East were highlighted recently when Colony won a contract to develop the Taghazout luxury resort on the Atlantic coast of Morocco.
Last year, Colony teamed up with Saudi Prince Alwaleed bin Talal to buy Fairmont, the Canadian luxury hotels group, for $4bn.