Ampol may seek to extend due diligence on Z Energy

Ampol CEO Matthew Halliday. Picture: Toby Zerna

Australian fuel retailer Ampol is seeking to extend its due diligence on Z Energy, according to market sources.

Ampol was granted four weeks of due diligence for the New Zealand fuel retailer, which ended last week.

Covid-19 lockdowns in both New Zealand and Australia are said to have slowed the process and Ampol is believed to be looking for another one to two weeks.

Sources expect that if Ampol agrees to buy Z Energy, as expected, it will gain approval from NZ’s Overseas Investment Office, but it could face opposition from the country’s Commerce Commission, with asset sales expected to be required to get a transaction across the line.

Ampol’s offer has blocked an upcoming dividend, thought to be about NZ8c per share, and the hope is that Ampol will lift its offer to enable that payment to occur. Ampol has bid $NZ2bn ($1.9bn) for Z Energy, equating to $NZ3.78 per share, a 22 per cent premium to its last closing price at the time.

While Z Energy allowed due diligence, it has not yet recommended a transaction.

Z Energy’s shares closed at $NZ3.43 or $3.34 on the ASX on Friday. Shares in Ampol, which plans to raise equity for what may be a cash and scrip transaction, closed at $27.67.

Z Energy operates 133 service stations in New Zealand with the Caltex brand and 197 with its own brand. Ampol owns 106 Gull service station sites in NZ.

The recent closure of NZ’s only oil refinery at Marsden Point in Northland offers Ampol an earnings stream by selling fuel into the country.

Ampol is working with Macquarie Group and law firm Bell Gully, while Z Energy is working with Goldman Sachs and Chapman Tripp.