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Financial Times: Colony Capital clinches €2.6bn Tamoil deal

By James Politi in New York and Ed Crooks in London
Published: June 7 2007 03:00 | Last updated: June 7 2007 03:00

Colony Capital, the US private equity group, yesterday 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.

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-richprivate equity groups are competing for assets around the globe, and are increasingly able to seal trans-actions in politically sensitive areas such as energy. 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 whenColony 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.

The deal comes at a time of restructuring in the European refining industry, as the major oil companies try to reshape their portfolios.

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.

Petroplus, which was floated last year by its private equity backers, has been expanding as a specialist downstream company buying refineries such as BP’s Coryton refinery in England, in a $1.6bn deal.

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