Ampol’s sale process of its Gull fuel retailing business in New Zealand is said to have come down to an auction among private equity firms, where buyer Allegro Funds was the standout bidder, according to sources.
After agreeing to buy Z Energy last year for $NZ2bn, the listed fuel retailer sold Gull to appease the competition watchdog in New Zealand and market analysts are praising Ampol for the price achieved.
Sources understand that at least one other party was vying for the assets, but the private equity firm that was also in the mix was far off the pace, offering between $NZ300m ($280m) and $NZ400m for the business.
Allegro’s offer valued Gull at $NZ572m and expectations are now that the turnaround private equity fund that targets distressed opportunities will move to float Gull or sell the sites off as it has done with other investments.
Groups that target distressed opportunities turned up in the auction given that mainstream players are sidestepping fuel-related companies amid predictions of more electric vehicle use in future.
Allegro’s offer, backed by lenders Ares and ASB, is thought to have equated to about five times Gull’s earnings before interest, tax, depreciation and amortisation of about $50m.
Gull operates a network of 112 primarily unmanned fuel service stations, and Allegro will also buy a 91 millilitre fuel import terminal at Mt Maunganui and six retail sites that are leased to Gull as part of the transaction.
Price expectations were earlier up to $NZ600m for the portfolio.
The $NZ509m in proceeds will be used to pay for Z Energy, which will also be funded through cash on Ampol’s balance sheet and the sale of other assets such as smaller properties.
Ampol, advised by Macquarie, purchased the business in 2017 for $325m and will supply fuel to Gull for about five years.
The situation provides an interesting snapshot into the sort of buyers that might line up for 7-Eleven in Australia, were it to hit the market. The convenience store operator has been off and on the market over the years.
Elsewhere, nickel producers such as Western Areas are expected to be sold off in the coming days after experiencing a staggering rally linked to the nickel price more than doubling since December.
Russia is a major nickel producer and China’s Tsingshan has been short of the commodity and faced margin calls, but now it has beefed up its supplies.
After suspending trade, expectations are that nickel stocks in Australia will come off the boil as a result.
Western Areas on Monday said it would delay its $1.1bn merger with IGO due to the nickel price volatility that has sent its stock beyond IGO’s offer. Western Areas shares closed at $3.51 after IGO offered $3.36 a share in December.
Extracted from The Australian