Australia’s Ampol submits unsolicited bid to takeover Z Energy

Z Energy, New Zealand’s largest fuel retailer, yesterday announced that it has received a non-binding indicative acquisition proposal from Ampol Limited, previously known as Caltex Australia.

Based in Wellington, Z Energy owns and manages over 300 fuel  stations in New Zealand under the Z and Caltex brands, supplying approximately four billion litres of fuel annually to  customers.  

“Z Energy is a logical growth opportunity for Ampol as both companies are market leaders in their respective home  markets and have very similar business models. A successful acquisition would create an A&NZ leader in fuel, with  significant regional scale and trusted and iconic brands on both sides of the Tasman,” said Ampol CEO and Managing Director, Matt Halliday.  

“Ampol has a strong track record of reliably delivering transport fuels in New Zealand, with NZD80 million (USD55 million) invested since  2016. Should a transaction proceed, Ampol believes that it will bring considerable benefits to the New Zealand market,  helping to maintain fuel security and support New Zealand industry. Given the ongoing work of both organisations in energy transition, a combined entity would provide a new, larger platform, supporting the development of lower  emissions energy solutions for customers across Australia and New Zealand.”

Ampol’s cash price offer of NZD3.78 (USD2.60) per share represents a 22% premium over Z Energy’s share price as of August 12, 2021. Ampol’s offer values Z Energy at just under NZD1.97 billion (USD1.35 billion).

Ampol’s proposal follows earlier unsolicited, confidential and non-binding  indicative proposals in the form of letters or verbal communications to Z Energy for NZD3.35 (USD2.30),  NZD3.50 (USD2.40) and NZD3.60 (USD2.47) per share. 

Z Energy and Ampol are discussing the option to include a partial Ampol share consideration and/or a secondary listing of Ampol on the NZX.  

Ampol is an Australian-based retail fuels and distribution business that is listed on the  ASX. Ampol owns and operates the Gull fuel distribution business in New Zealand. If approved by regulatory authorities, it would almost mean that Ampol would have to fully divest its ownership in Gull New Zealand, which it acquired in July 2017 for NZD340 million (USD233 million). 

The acquisition is subject to board approval by both Z Energy and Ampol, Z Energy shareholder approval and High Court approval. Any transaction is expected to be subject to approval by both the New Zealand Commerce Commission and the New Zealand Overseas Investment Office. 

Although earlier Ampol proposals were rejected by Z Energy’s Board, it has now agreed to grant a four-week period of exclusivity, subject to usual  exceptions, so that Ampol can undertake confirmatory due diligence, develop their proposal and for the two parties to be able to negotiate.

Z Energy’s Board has formed a subcommittee to  manage the process and has retained Goldman Sachs as financial adviser and  Chapman Tripp as external legal counsel. 

“Although this proposal is subject to further development  and evaluation by both parties, the Board supports a period of exclusive  engagement with the objective of developing a transaction that would be  acceptable to the Board and shareholders. The Board will always act constructively  in the best interests of the company and its shareholders,” said Z Energy Chair Abby Foote.