Ampol has agreed to sell its New Zealand petroleum distribution business to Australian investment manager Allegro for $NZ572 million ($534.1 million), clearing the path for the oil refiner to complete its takeover of Z Energy.
Ampol last year agreed to purchase New Zealand’s Z Energy for $NZ1.97 billion, a deal that will see the company use its trading arm to help supply the New Zealand market, where the lone refinery is set to be converted into a fuel import terminal.
The deal was only permitted if Ampol divested Gull, the New Zealand distribution business, and the company said it has now entered into a binding agreement with Allegro subject to regulatory approval.
The deal has an enterprise value of $NZ572 million but after deductions for debt and leasing fees, Ampol will bank about $NZ509 million.
Under the sales arrangement, Ampol has committed to a five-year fuel supply agreement with Gull as requested by Allegro. The arrangement is subject to annual price reviews and termination rights, Ampol said.
Shares in Ampol traded 2.5 per cent firmer at $28.82 at 11.35am AEDT as investors cheered the removal of one of the last remaining roadblocks to the Z Energy deal.
New Zealand’s competition regulator still needs to clear the acquisition of Z Energy and the deal for Gull. Once completed, the deal will create the No. 1 Trans-Tasman fuel player with 2400 fuel sites and 23.5 billion litres of fuel sales annually.
Ampol has estimated the Z Energy deal could deliver about $NZ80 million in synergies each year,
Z Energy has about 200 Z-branded fuel shops and 133 Caltex service stations, and sold 1392 million litres of fuel in the year ended June 30. It also imported 9.5 million barrels of crude oil into Refining NZ in the year, to produce 1566 million litres of finished petrol, diesel, aviation fuel and marine fuel oil.
The deal is expected to close before June 30, and comes as Ampol rides strong market conditions.
Ampol last month posted its biggest income in three years, as record sales and strong international demand pushed the petroleum company to a profit after suffering a year-earlier loss of nearly $500 million.
Annual revenue totalled $631 million in the year ended December 31, up 57 per cent from last year when income totalled $401.2 million, boosted by soaring refinery margins.
The average margins are so high, Ampol said it did not expect to receive any of the government subsidies introduced last year, which paid Ampol and Viva Energy when refining margins were weak. The subsidies remain in place and are available until 2027, with an option to extend to 2030.
Extracted from AFR