Of all the balls in the air at Ampol Ltd (what was Caltex Australia until this week), one thing investors can bank on is that its proposed property spin-off would create value.
That’s according to numbers by JPMorgan analysts, who reckon a 49 per cent property IPO or sale would boost Ampol earnings per share by about 10 per cent in the 2022 financial year.
JPMorgan told clients the properties plan could see Ampol receive post tax proceeds worth $593 million to $789 million, or $2.38 to $3.16 a share, which could be returned to shareholders.
Assuming an off-market buyback, in line with Ampol’s recent moves to return franking credits to shareholders, the analysts said it could buy back shares worth $544 million and $350 million in 2021 and 2022, respectively.
And that would increase EPS by 3.4 per cent in 2021 and 10.4 per cent in 2022, according to the detailed analysis.
JPMorgan said there would be other benefits to creating the service station REIT and spinning off a 49 per cent stake, including a look-through value to Ampol’s remaining investment in the REIT.
It comes as as Ampol’s suitor, Canadian Alimentation Couche-Tard, walked away from an earlier $10 billion takeover offer, and it gets back to work on plans for the property spin-off.
The focus, for now, is on testing trade appetite and Ampol’s bankers at UBS recently re-engaged with potential trade buyers.
Extracted from AFR