Ampol has confirmed it has entered into a binding agreement to acquire 100% of the shares of Z Energy Limited for $2bn.
Z Energy’s Board of Directors have unanimously approved the deal, which will see Ampol acquire Z Energy for NZ$3.78 per share, with the concession that Z Energy will pay NZ 0.05 cents per share with respect to the half year, which ended 30 September 2021.
Ampol’s offer includes an adjustment mechanism where Ampol will pay an additional cash amount of NZ 0.055 cents per share per day for each calendar day that completion of the transaction extends beyond 31 March 2022, up to a limit of NZ 10 cents per share.
As part of the transaction, Ampol has agreed to divest Gull, which it has owned since 2017. The divestment will occur within a prescribed period of time and Ampol is exploring both trade sale and IPO options.
Ampol expects the final funding mix to be largely debt funded, which will be supported by the divestment of Gull as well as potentially a new hybrid issue of up to A$600 million (structured to achieve 50% equity credit), subject to market conditions.
The transaction is conditional on Ampol gaining approval from both the New Zealand Commerce Commission (NZCC) and the New Zealand Overseas Investment Office (OIO).
The acquisition is a highly strategic opportunity for Ampol, with Z Energy the market leader in New Zealand, with a 40% share of fuel sales. This is in contrast to the Gull business, which accounts for seven per cent of fuel sales.
The deal will create the number one Trans-Tasman fuel player with 2,400 fuel sites and 23.5 billion litres of fuel sales annually.
Ampol has confirmed that the Z brand will be retained, and the retention of key personnel will be a priority. Z Energy will operate as a subsidiary of Ampol Limited with a New Zealand-based management team and staff.
Matt Halliday, CEO and Managing Director, Ampol, said the deal could deliver up to NZ$80m in synergies annually.
“The additional scale, when combined with our established trading and shipping capabilities, regional supply chain and broader fuels infrastructure will bolster New Zealand’s fuel security as the local market transitions to fuel imports,” he said.
“Given the ongoing work of both organisations in energy transition, a combined entity will also provide a new, larger platform to support the development of lower emissions energy solutions.”
The transaction is targeted for completion in the first half of 2022 with the Z Energy shareholder vote expected to occur early in the year.