The Ampol Ltd (ASX: ALD) share price and the Z Energy Ltd (ASX: ZEL) share price will be on watch on Monday.
This follows news that several months after Ampol first made an approach, the two parties have finally agreed on a takeover transaction.
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What was announced?
According to the release, Ampol and Z Energy have entered into a binding scheme implementation agreement under which Ampol will acquire all the shares of Z Energy for NZ$3.78 cash per share. In addition, Z Energy shareholders will receive NZ$0.05 per share of the interim FY 2022 dividend without adjusting the cash offer price.
This brings the overall value for the transaction to NZ$3.83 per share, which represents an 18.9% premium to the Z Energy share price at Friday's close.
Furthermore, the release notes that if the scheme has not been implemented by 31 March 2022, the final cash consideration will be progressively increased to reflect Z Energy's FY 2023 performance. This allows for an increase of up to NZ$0.10 per share.
What now?
The Z Energy Board unanimously recommends that shareholders vote in favour of the scheme. This is subject to the scheme consideration being within or above the valuation range specified by the independent advisor and in the absence of a superior proposal being made for Z Energy.
The release also notes that the scheme is subject to a number of conditions including regulatory approvals from the New Zealand Commerce Commission (NZCC) and New Zealand Overseas Investment Office (OIO).
Z Energy's Chair, Abby Foote, said: "The Z Board is unanimous in recommending this offer to Z shareholders. The Board has been focussed on the best interest of Z shareholders and has engaged constructively with Ampol over several months to secure additional value beyond the initial approach in June. The Board took the opportunity to obtain feedback from shareholders on the proposal and that has played an important role in finalising the terms of the deal."
Why is Ampol acquiring Z Energy?
Ampol highlights that Z Energy is the market leader in New Zealand with a 40% share of all fuel volumes. It expects this to create a "Trans-Tasman fuel champion" with a combined network of ~2,400 sites and supplying ~23.5 BL of fuel per annum to customers in the Asia-Pacific region.
In addition, management sees material transition and synergy opportunities totalling NZ$60 million to NZ$80 million. These are expected to come from fuel procurement and overhead cost reductions.
All in all, Ampol believes the acquisition could be double digit earnings per share accretive and +20% free cash flow accretive in 2023.
The Z Energy share price is up 8% on the NZX in early trade.
