Ampol signs off $1.9bn Z Energy petrol deal, which includes 300 petrol stations in New Zealand
The $1.9bn deal will hand Ampol control of Z Energy’s 300 petrol stations across New Zealand and the supply of 4 billion litres of fuel annually to customers.
Australian fuel retailer Ampol will acquire New Zealand services station business Z Energy for $NZ3.78 ($A3.58) a share, plus an extra NZ5c a share dividend to get a deal over the line.
The $NZ2bn deal includes Ampol paying Z Energy’s shareholders a NZ5c a share dividend, which will be paid as an interim dividend for the half year ended September 30.
The deal will be funded through new debt facilities along with existing facilities and a potential hybrid issue of up to $600m subject to market conditions. Ampol is targeting double digit earnings per share accretion and more than 20 per cent free cash flow accretion from 2023.
Z Energy owns 300 petrol stations and supplies four billion litres of fuel annually to customers.
The NZ company’s board has unanimously approved the transaction and recommended that shareholders vote in favour of the transaction.
The proposed acquisition is subject to a Z Energy shareholder vote, NZ High Court approval and regulatory approvals, including NZ Commerce Commission clearance and Overseas Investment Office approvals.
“Z Energy is a logical growth opportunity for Ampol given it is the market leader in New Zealand and aligned with our international growth strategy,” Ampol chairman Steven Gregg said Monday.
“The combined entity will be a trans-Tasman leader in transport fuels and convenience retail, with greater scale and synergies supporting strong returns and earnings growth for our shareholders, whilst maintaining our commitment to financial discipline.”
Ampol will be required to sell its Gull fuel distribution business, according to Z Energy, to ease competition concerns in the market as the deal would take Ampol’s market share in New Zealand to 40 per cent across three brands.
The deal had been heavily tipped in the market with the closure of the NZ oil refinery at Marsden Point, of which Z Energy is a 15 per cent shareholder, seen as the catalyst for a buyout, transforming New Zealand into an all-import fuel market.
Analysts had previously questioned the value of the Z Energy deal, which could see Ampol raising $600m of equity to fund the buyout along with debt and cash from divestments including Gull.
“Ampol will seek to minimise the requirement for any new equity in the final funding mix,” Ampol said on Monday.
The offer is pitched at $NZ3.78 a share, a 22 per cent premium to its last close on August 12, and follows three earlier, previously undisclosed, bids by Ampol at $NZ3.35 on June 2, $NZ3.50 on July 1 and then at $NZ3.60 a share.