Ampol (an Australian petroleum company) and Z Energy have entered a binding implementation scheme for Ampol to acquire Z for an unchanged NZD 3.78 per share in cash, or a total outlay of NZD 2.0 billion.
Z Energy will pay an interim NZD 5.5 cent dividend for its half year to Sept. 30, 2021, but any other dividends will reduce Ampol’s offer price by the equivalent.
The Z acquisition is targeted for completion in the first half of 2022 following regulatory approval, and the Z shareholder vote is expected to occur early in 2022. Z’s board unanimously approves the transaction and recommends Z shareholders vote in favour.
The acquisition is still subject to a Z Energy shareholder vote, New Zealand High Court approval, and other regulatory sign-offs. There is logic to the merger, Ampol and Z have very similar business models. And with Z Energy shares in the doldrums for over two years with intense retail fuel competition in New Zealand and COVID-19 disruption, we guess Z shareholder fatigue is likely to get the deal over the line.
Z Energy shares have fallen from a peak of NZD 8.65 in July 2016 and have only recently show signs of life from NZD 2.56 lows. Ampol has committed to divest its Gull New Zealand business to avoid potential competition law breaches. Gull sale proceeds will eventually form part of the funding for Z. But Ampol has secured AUD 1.8 billion in new facilities to fully debt fund the transaction.