Australian fuel retailer and distributor Ampol Ltd. made a $1.4 billion takeover offer for New Zealand counterpart Z Energy Ltd.
The non-binding indicative proposal is pitched at NZ$3.78 a share, Wellington-based Z Energy said Monday, valuing the company at NZ$1.97 billion. Z Energy shares surged as much as 19%. Confirmation of the offer follows a Bloomberg News report Sunday that the companies were in advanced talks.
Ampol, which recently re-branded from the name Caltex, would be adding New Zealand’s biggest fuel retailer. Z Energy was formed by local investors to buy Royal Dutch Shell Plc’s distribution business in 2016 and later added Chevron Corp.’s Caltex-branded outlets.
“Z Energy is a logical growth opportunity for Ampol as both companies are market leaders in their respective home markets and have very similar business models,” Ampol Managing Director Matt Halliday said in a statement. “Should a transaction proceed, Ampol believes that it will bring considerable benefits to the New Zealand market, helping to maintain fuel security and support New Zealand industry.”
Z Energy shares rose 54 cents to NZ$3.59 at 11:32 a.m. in Wellington. The offer is a 35% premium to trading levels in late July immediately before speculation emerged that Z Energy had suitors.
Z Energy said the offer represents a 22% premium to the share price before the proposal was received on Aug. 12. It followed earlier approaches that began at NZ$3.35 a share in early June, the company said.
Ampol had been given four-week exclusivity to undertake confirmatory due diligence and develop its proposal. The final offer is likely to be a scheme of arrangement that will be put to Z Energy shareholders for approval. While engagement is progressing well to date, there is no guarantee a binding transaction will be agreed, Sydney-based Ampol said.
Subject to further discussions, Ampol said it is also willing to consider an amendment to the proposal to include partial Ampol share consideration. Z Energy said those talks could also lead to a secondary listing of Ampol shares on the NZX.