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Australian supermarket chain Woolworths has agreed to sell 540 company-owned fuel convenience stores to British convenience retailer EG Group for $1.242bn.

Under the binding agreement, a 15-year commercial alliance has been entered by both parties for fuel discount redemption, loyalty and wholesale product supply.

As part of the transaction, Woolworths will focus on starting a new wholesale food supply agreement to the network to offer extensive product range and competitive pricing.

Woolworths Group CEO Brad Banducci said: “The agreement will continue to strengthen the opportunities our customers have for greater value when shopping with us, with the benefits of the Woolworths Rewards program and the fuel discount offer set to continue.

“The agreement will continue to strengthen the opportunities our customers have for greater value when shopping with us.”

“A long-term wholesale food supply arrangement will also ensure that EG Group can benefit from competitive product sourcing, including Woolworths’ own brands, to provide a world class convenience offer that will add further scale to Woolworths FoodCo.”

The transaction is currently subject to Foreign Investment Review Board approval and is expected to close in early 2019.

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Following the completion of the transaction, Woolworths will also transfer all existing Woolworths Petrol management and operations teams to EG Group.

In addition, the retailer will consider a range of options for the use of proceeds, including capital management initiatives.

EG Group founder and co-CEO Mohsin Issa said: “The Woolworths’ assets present a fantastic opportunity to further grow our international footprint and deliver our best-in-class retail experience in a new geography.

“We are committed to investing in the site network, introducing leading retail brands, developing the alliance with Woolworths and working with the exceptional management team.”

EG Group currently operates 4,700 stores across Europe and North America and employs more than 28,000 people.