Coles Express service stations will be rebranded under a $300 million deal that will see the supermarket chain sell off its huge fuel business.

Coles announced on Wednesday that Viva Energy, the company behind Shell-branded servos will buy its 710 Coles Express stores nationwide.

The supermarket will continue to supply the convenience stores, and a 4-cent-per-litre fuel discount deals with Coles supermarkets will continue.

Asked about the motivation for the sale on Wednesday morning, Coles boss Steven Cain said Viva was keen to buy the business and Coles wanted to prioritise investment in its existing supermarket business.

But he also said selling the petrol stations would help Coles achieve its climate change targets, including net zero carbon emissions by 2050.

“Viva is well-placed to make the most of opportunities to grow the Express business into the future, while we will strengthen our focus on our omnichannel supermarket and liquor businesses and our ambition
of becoming Australia’s most sustainable supermarket group,” he said.

The deal will require approval from the Australian Competition and Consumer Commission and the foreign investment review board, with an expected sale completion date sometime next year.

Coles had a decade-long fuel supply deal in place with Viva under which the businesses collaborated closely. It will be torn up under the new deal.

Viva chief executive Scott Wyatt said buying the service stations would enable it to expand investment in the store network, while an ongoing deal with Coles and Flybuys would create a “seamless” experience.

“We have enjoyed a strong partnership with Coles over the last 20 years and this is an exciting next step,” Mr Wyatt said.

“The acquisition means we will be able to accelerate our plans to grow the integrated fuel and convenience business while our customers continue to enjoy the excellent customer service provided.”

Viva plans to rebrand Coles Express, but has not confirmed the name.

Coles Express booked $1.13 billion in sales in financial year 2022 and earnings of about $42 million.

It has $816 million worth of lease liabilities, which will be transfered from Coles’ balance sheet to Viva’s if regulators approve the sale.