Ampol Ltd (ASX: ALD) shares rose by more than 9% on Friday after the company announced a $1.1 billion acquisition.
The Ampol share price reached an intraday high of $29.64, up 9.45%, before retracing a bit to $29.04, up 7.28%, at the time of writing.
Ampol announced it has agreed to buy EG Australia for $1.1 billion.
EG owns and operates about 500 service stations across Australia, co-branded with Ampol, for which Ampol supplies the fuel.
The EG network is Ampol's largest dealer network.
The deal means Ampol would own and operate the service stations and their convenience stores.
Ampol hopes to complete the deal by mid-2026, assuming approval from the Australian Competition and Consumer Commission (ACCC).
Ampol intends to offer to sell about 20 sites from the combined networks, if required, to satisfy the ACCC's competition rules.
It expects the full integration of the stations to take about two years after the deal's completion.
Ampol said the deal was compelling for its post-synergy multiple of 5.8x and targeted synergies of $65 million to $80 million.
The company expects high single-digit pro forma adjusted earnings per share (EPS) accretion, as well as double-digit pro forma free cash flow per share accretion after synergies.
Ampol released an investor presentation to provide further information to shareholders.
What does Macquarie think?
In a new note published on Friday, Macquarie retained its neutral rating on Ampol shares and raised its 12-month price target by 2.4%.
Macquarie now values Ampol shares at $28.15 apiece in 12 months, which is lower than where the ASX 200 energy share is trading today.
However, the broker said its new 12-month price target did not factor in any value accretion from the EG Australia deal.
This is because Ampol needs various approvals to get the deal done, and its next lot of financial results are about to be released.
The broker said:
We do not factor in the EG acquisition to our forecasts yet ($208m/$280m EBITDA pre/post synergies and U-GO).
[Target price] +2.4% to $28.15 (15x NTM), factoring minor initial credit for an improving earnings growth profile and higher quality mix.
The broker was broadly positive about the EG Australia acquisition.
Macquarie said:
The EG opportunity, coupled with U-GO strategy, places ALD back on a structural earnings growth trajectory (in non-refining), exercising balance sheet (3.0x adj pro-forma ND/EBITDA).
Pushes out prospect of special div's, but the trade-off seems very sensible to us.
What will Ampol shares pay in dividends?
Ampol will release its 1H FY25 results next Monday, 18 August.
Macquarie is predicting Ampol shares will pay a dividend of 38 cents per share for 1H FY25.
