Expectations that Ampol will acquire EG Group’s portfolio of Australian service stations are dwindling as reports indicate the target is in poor condition.
Sources reveal that the global EG Group has prioritised debt reduction over investing in the business, which has led to its current state.
Ampol had initially considered purchasing EG Group’s Australian operations. However, recent discussions suggest that Ampol will likely withdraw from the deal.
Additionally, Ampol’s share price has recently declined. Earlier, it was thought that the company’s strong share price could help finance the acquisition.
Another complication for Ampol is the potential need to sell some service stations to satisfy the competition regulator if it proceeds with the acquisition.
Back in 2021, DataRoom reported that EG Group was contemplating an initial public offering (IPO) on the Australian Securities Exchange (ASX).
At that time, the British company, which operates in Europe, the US, and Australia, aimed to reduce its debt following an aggressive acquisition spree over four years, expanding its global portfolio to more than 6000 sites.
Ampol was considered a potential buyer then, but only at a strategic price.
EG Group’s Australian assets include 540 fuel convenience sites acquired from Woolworths in 2018 for $1.7 billion, a price deemed aggressive.
In early 2020, EG Group made a $3.9 billion bid for Ampol’s convenience retail business, but the offer was rejected.
Last year, EG Group’s earnings before interest, tax, depreciation, and amortisation (EBITDA) fell by 7% to $1.1 billion, influenced by oil price volatility and stronger fuel performance in the previous year as the company focused on asset sales and reducing debt.
EG Group was founded in 2001 by brothers Mohsin and Zuber Issa.
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