The sale proceeds will be used to strengthen the Woolworths’ balance sheet and reinvest in its core businesses.

The deal will encompass all 527 Woolworths-owned petrol stations and 16 development sites.

Woolworths and BP will equally fund the continuation of the four cents a litre fuel discount for a minimum 10-year period.

BP will maintain the four cents a litre fuel discount offer at the 527 petrol stations and expand this offer to additional BP sites.

Woolworths chief executive officer Brad Banducci said the transaction was a win for customers and shareholders. 

“For Woolworths customers, our strategic partnership with BP will enable them to enjoy our Woolworths Rewards program at BP fuel sites and ensure they continue to benefit from the four cents a litre fuel discount,” he said. 

“Longer term, it will also provide them with a compelling, new food-on-the go offering through the roll-out of the Metro at BP concept, expanding our existing Metro offer.”

BP Australia president Andy Holmes said BP was excited to bring BP’s global expertise and success in food and convenience offers to Australia through the partnership with Woolworths. 

“Around the world we have delivered leading offers like this via long-term partnerships with other leading food and grocery retailers including Marks & Spencer in the UK and REWE in Germany,” he said.

The deal is subject to regulatory approval.

Caltex Australia managing director and chief executive officer Julian Segal said while Caltex Australia was disappointed that the successful fuel alliance would come to an end, it was important that it exercised financial discipline in pursuing growth.

Caltex made a conditional and confidential proposal to Woolworths to acquire its fuels business and continue the fuel alliance.

Caltex will continue to supply fuel to Woolworths until the BP deal is finalised.

The sale is expected to take about 12 months to complete.