Ampol, a fuel refiner and distributor worth $7.6 billion, has joined the race to acquire 7-Eleven, a convenience retailer valued at $2 billion, as the sales process intensifies. In the past, Ampol faced opposition from the Australian Competition & Consumer Commission (ACCC) when attempting to purchase Mobil sites about ten years ago.
However, this time, it is believed that a strategic player is more likely to secure the deal, and Ampol’s strong financial position with a net debt of $2.9 billion against a market value of $7.6 billion puts it in a favourable position for further acquisitions.
Ampol’s successful acquisition of Z Energy for $NZ2 billion has also garnered trust from the market. Some analysts believe that Ampol may find a better target in the form of the EG business in Australia, as 7-Eleven recently entered into a 15-year fuel supply agreement with Mobil.
Speculation arose in 2021 about EG’s potential initial public offering of its $1.7 billion Australian unit on the ASX, making a sale plausible. Asda’s recent acquisition of EG’s British and Irish business for £2.27 billion ($4.34 billion) could serve as a catalyst for the sale of EG’s operations in Australia.
Ampol has a close relationship with Macquarie Capital, and there were previous indications that Ampol might be interested in EG’s business, although at a lower price. The ACCC, which previously posed a challenge for Ampol, is not expected to be a major obstacle this time. EG previously outbid other contenders to acquire a portfolio of 540 fuel convenience sites from Woolworths for $1.7 billion, but some believe it may have overpaid for the acquisition.
As the distribution of clean fuels like hydrogen remains important, service stations are expected to maintain their significance. In early 2020, EG made an unsuccessful bid to acquire Ampol’s convenience retail business for $3.9 billion in cash, with the plan to list the fuel and infrastructure division separately.
Azure Capital is overseeing the sale of 7-Eleven on behalf of the Withers and Barlow families, and the retailer currently generates approximately $220 million in annual earnings before interest, tax, depreciation, and amortisation.
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