Z Energy Ltd signed an agreement with a subsidiary of US energy giant Chevron Corp on Monday to acquire 100% of Caltex service station owner Chevron NZ Ltd for $785 million in cash.
It’s subject to Overseas Investment Office approval & Commerce Commission clearance. Settlement target is 30 November.
The acquisition excludes Chevron’s upstream interests and its 11.4% stake in The NZ Refining Co Ltd, which Chevron put on the market through a bookbuild last week.
Z Energy expects to finance the purchase through a combination of $80 million cash, $540 million of committed credit facilities and a $185 million pro rata equity-raising via an entitlement offer. Transaction costs will add $18 million to the price.
The acquisition includes an inventory of 2 million barrels, supply to a network of 146 Caltex service stations & 73 truck stops, 10 terminal assets (7 owned & 3 accessed through joint ventures), the Challenge brand, transitional use of the Caltex brand and participation in the AA Smartfuel loyalty programme.
Z expects the acquisition to be earnings accretive from day 1, and it’s estimated earnings/share to rise 34% before synergies, which are forecast to be worth $15-25 million ebitdaf/year from the 2017 financial year. (Ebitdaf is earnings before interest, tax, depreciation, amortisation & financial instrument value changes.)
The price represents an acquisition multiple of 5.9 times 2014 financial year estimated replacement cost ebitdaf and 6.9 times the 5-year average historical cost ebitdaf.
All but 10 of the Caltex service stations are retailer owned & operated. Chevron owns the other 10 and also supplies 90 Challenge service stations.
Z has 210 service stations & 92 truck stops, owns 7 terminals and has another 4 in joint ventures.
Z Energy’s interest in The NZ Refining Co Ltd jumped temporarily from 15.36% to 26.72% as a result of the deal, but Z won’t be able to vote those extra shares or control their disposal. The bookbuild is through Craigs Investment Partners.
Attribution: Company release.