IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p><a href="https://www.smartkarma.com/entities/z-energy-ltd" target="_blank" data-smartkarma-citation="entities:9838:1" rel="noopener">Z Energy Ltd (ZEL NZ)</a> is a fuel distribution and retailing business which owns and manages over 300 fuel stations in New Zealand under the Z and Caltex brands. Z Energy revealed a non-binding indicative proposal from <a href="https://www.smartkarma.com/entities/ampol-ltd" target="_blank" data-smartkarma-citation="entities:345:1" rel="noopener">Caltex Australia (ALD AU)</a>/Ampol to acquire it via a scheme of arrangement. Ampol is offering NZ$3.78 per share. The bid represents a 22% premium to the share price on 12 August (prior to receipt of the announced proposal), a 35% premium to the share price on 26 July (prior to media speculation regarding a bid) and a 47% premium to the share price on 1 June (prior to Ampol’s first rejected proposal).</p><p>Z Energy has agreed to grant Ampol a four-week exclusivity period to conduct due diligence. The indicative offer permits Z Energy to pay dividends up to NZ 10 cents on the scheme implementation to accommodate any regulatory-driven delays. Subject to discussions, Ampol’s offer may include a scrip component and a secondary New Zealand listing.  </p><p>Pushing for a better price is part of the M&amp;A game. The Board had rejected Ampol’s previous three offers as they did not represent compelling value. The Board was able to secure a sweetened bid which offers a 12.8% bump to Ampol’s first offer of NZ$3.35 per share.  </p><p>Ampol’s offer is a premium to Z Energy's historical EV/EBITDA multiples but a discount to pre-COVID-19 share prices. Z Energy’s CEO opines that Ampol’s bid could be a catalyst for other bidders that had previously signalled interest to make a move for Z Energy. Potential bidders could be <a href="https://www.smartkarma.com/entities/chevron-corp" target="_blank" data-smartkarma-citation="entities:11091:1" rel="noopener">Chevron Corp (CVX US)</a>, Vitol, <a href="https://www.smartkarma.com/entities/glencore-plc" target="_blank" data-smartkarma-citation="entities:764:1" rel="noopener">Glencore Plc (GLEN LN)</a>, Trafigura and Japanese refiners.</p><div class="content-highlight"><p>Overall, we think Ampol’s offer is a good starting point to lay down a valuation benchmark and suspect that there is some upside to the final offer price. At the last close price of NZ$3.48, Z Energy’s shares are trading at an 8.6% gross spread to the indicative offer.</p></div>

Z Energy Ltd (ZEL NZ) is a fuel distribution and retailing business which owns and manages over 300 fuel stations in New Zealand under the Z and Caltex brands. Z Energy revealed a non-binding indicative proposal from Caltex Australia (ALD AU)/Ampol to acquire it via a scheme of arrangement. Ampol is offering NZ$3.78 per share. The bid represents a 22% premium to the share price on 12 August (prior to receipt of the announced proposal), a 35% premium to the share price on 26 July (prior to media speculation regarding a bid) and a 47% premium to the share price on 1 June (prior to Ampol’s first rejected proposal).Z Energy has agreed to grant Ampol a four-week exclusivity period to conduct due diligence. The indicative offer permits Z Energy to pay dividends up to NZ 10 cents on the scheme implementation to accommodate any regulatory-driven delays. Subject to discussions, Ampol’s offer may include a scrip component and a secondary New Zealand listing.  Pushing for a better price is part of the M&amp;A game. The Board had rejected Ampol’s previous three offers as they did not represent compelling value. The Board was able to secure a sweetened bid which offers a 12.8% bump to Ampol’s first offer of NZ$3.35 per share.  Ampol’s offer is a premium to Z Energy's historical EV/EBITDA multiples but a discount to pre-COVID-19 share prices. Z Energy’s CEO opines that Ampol’s bid could be a catalyst for other bidders that had previously signalled interest to make a move for Z Energy. Potential bidders could be Chevron Corp (CVX US), Vitol, Glencore Plc (GLEN LN), Trafigura and Japanese refiners.Overall, we think Ampol’s offer is a good starting point to lay down a valuation benchmark and suspect that there is some upside to the final offer price. At the last close price of NZ$3.48, Z Energy’s shares are trading at an 8.6% gross spread to the indicative offer.

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>Kiwi fuel distributor <a href="https://www.smartkarma.com/entities/z-energy-ltd" target="_blank" data-smartkarma-citation="entities:9838:1" rel="noopener">Z Energy Ltd (ZEL NZ)</a> has announced it has <a href="http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/377730/352778.pdf" target="_blank" rel="noopener">received</a> a non-binding indicative acquisition proposal from <a href="https://www.smartkarma.com/entities/ampol-ltd" target="_blank" data-smartkarma-citation="entities:345:1" rel="noopener">Ampol (ALD AU)</a>.</p>
<p>The Offer of NZ$3.78/share, by way of a Scheme, is a 22% premium to the last closing price. According to the announcement, negotiations started at NZ$3.35/share.</p>
<p>As per Ampol's separate <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02410030_PS-2A1317126?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announcement</a>, the Offer price is a 35% premium to the last close on the 26 July, the day prior to the first press speculation of corporate activity. </p>
<p>The proposal requires a raft of approvals including ZEL's shareholder's approval, and both the New Zealand <a href="https://comcom.govt.nz/" target="_blank" rel="noopener">Commerce Commission</a> and the New Zealand Overseas Investment Office.</p>
<p>Ampol is committed to divesting discount retailer Gull if need be to gain necessary regulatory approvals.</p>
<p>Dividends up to a limit of NZ$0.10/share may be payable depending on when all approvals are secured. </p>
<p>ZEL is currently not recommending the Offer to shareholders. However:</p>
<blockquote>
<p>this Proposal is subject to further development and evaluation by both parties, the Board supports a period of exclusive engagement with the objective of developing a transaction that would be acceptable to the Board and shareholders. </p>
</blockquote>
<p>More below the fold.</p>

Kiwi fuel distributor Z Energy Ltd (ZEL NZ) has announced it has received a non-binding indicative acquisition proposal from Ampol (ALD AU).
The Offer of NZ$3.78/share, by way of a Scheme, is a 22% premium to the last closing price. According to the announcement, negotiations started at NZ$3.35/share.
As per Ampol's separate announcement, the Offer price is a 35% premium to the last close on the 26 July, the day prior to the first press speculation of corporate activity. 
The proposal requires a raft of approvals including ZEL's shareholder's approval, and both the New Zealand Commerce Commission and the New Zealand Overseas Investment Office.
Ampol is committed to divesting discount retailer Gull if need be to gain necessary regulatory approvals.
Dividends up to a limit of NZ$0.10/share may be payable depending on when all approvals are secured. 
ZEL is currently not recommending the Offer to shareholders. However:

this Proposal is subject to further development and evaluation by both parties, the Board supports a period of exclusive engagement with the objective of developing a transaction that would be acceptable to the Board and shareholders. 

More below the fold.

Z Energy (ZEL NZ) Tentatively Backs Ampol's Approach

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<p>Earlier today, <a href="https://www.smartkarma.com/entities/ampol-ltd" target="_blank" data-smartkarma-citation="entities:345:1" rel="noopener">Caltex Australia (ALD AU)</a> announced that it has submitted a non-binding indicative proposal to acquire <a href="https://www.smartkarma.com/entities/z-energy-ltd" target="_blank" data-smartkarma-citation="entities:9838:1" rel="noopener">Z Energy Ltd (ZEL NZ)</a> for NZ$3.78/share, valuing the company at around NZ$2bn and representing an implied Enterprise Value of NZ$2.8bn. The proposal would be implemented by way of a scheme of arrangement.</p><p>The offer price represents a premium of 22% to the close the day before the offer was made and is a 24% premium to the last close. But the offer is also 40% lower than the close price two years ago and 50% lower than the close price three years ago.</p><p>A dividend mechanism has been proposed that would permit <a href="https://www.smartkarma.com/entities/z-energy-ltd" target="_blank" data-smartkarma-citation="entities:9838:1" rel="noopener">Z Energy Ltd (ZEL NZ)</a> to pay a dividend on implementation of the scheme equal to NZ$0.055/share, per calendar day for each day that financial close extends beyond 31 March 2022, up to a limit of NZ$0.10/share.</p><p>The transaction is subject to negotiation of a Scheme Implementation Agreement (SIA), <a href="https://www.smartkarma.com/entities/ampol-ltd" target="_blank" data-smartkarma-citation="entities:345:1" rel="noopener">Caltex Australia (ALD AU)</a> and <a href="https://www.smartkarma.com/entities/z-energy-ltd" target="_blank" data-smartkarma-citation="entities:9838:1" rel="noopener">Z Energy Ltd (ZEL NZ)</a> board approval, <a href="https://www.smartkarma.com/entities/z-energy-ltd" target="_blank" data-smartkarma-citation="entities:9838:1" rel="noopener">Z Energy Ltd (ZEL NZ)</a> shareholder approval, New Zealand High Court approval, and regulatory clearances under the New Zealand Commerce Act and Overseas Investment Act.</p><p>To partially fund the transaction, <a href="https://www.smartkarma.com/entities/ampol-ltd" target="_blank" data-smartkarma-citation="entities:345:1" rel="noopener">Caltex Australia (ALD AU)</a> could issue around A$600m of stock to <a href="https://www.smartkarma.com/entities/z-energy-ltd" target="_blank" data-smartkarma-citation="entities:9838:1" rel="noopener">Z Energy Ltd (ZEL NZ)</a> shareholders or conduct a pro rata entitlement offer to its own shareholders.</p><p>We feel that the <a href="https://www.smartkarma.com/entities/z-energy-ltd" target="_blank" data-smartkarma-citation="entities:9838:1" rel="noopener">Z Energy Ltd (ZEL NZ)</a> board is still not convinced that the deal price is a good level for shareholders and it could take a bump to get this through. There could also be other players that enter the fray now that they know <a href="https://www.smartkarma.com/entities/z-energy-ltd" target="_blank" data-smartkarma-citation="entities:9838:1" rel="noopener">Z Energy Ltd (ZEL NZ)</a> could consider a deal.</p>

Earlier today, Caltex Australia (ALD AU) announced that it has submitted a non-binding indicative proposal to acquire Z Energy Ltd (ZEL NZ) for NZ$3.78/share, valuing the company at around NZ$2bn and representing an implied Enterprise Value of NZ$2.8bn. The proposal would be implemented by way of a scheme of arrangement.The offer price represents a premium of 22% to the close the day before the offer was made and is a 24% premium to the last close. But the offer is also 40% lower than the close price two years ago and 50% lower than the close price three years ago.A dividend mechanism has been proposed that would permit Z Energy Ltd (ZEL NZ) to pay a dividend on implementation of the scheme equal to NZ$0.055/share, per calendar day for each day that financial close extends beyond 31 March 2022, up to a limit of NZ$0.10/share.The transaction is subject to negotiation of a Scheme Implementation Agreement (SIA), Caltex Australia (ALD AU) and Z Energy Ltd (ZEL NZ) board approval, Z Energy Ltd (ZEL NZ) shareholder approval, New Zealand High Court approval, and regulatory clearances under the New Zealand Commerce Act and Overseas Investment Act.To partially fund the transaction, Caltex Australia (ALD AU) could issue around A$600m of stock to Z Energy Ltd (ZEL NZ) shareholders or conduct a pro rata entitlement offer to its own shareholders.We feel that the Z Energy Ltd (ZEL NZ) board is still not convinced that the deal price is a good level for shareholders and it could take a bump to get this through. There could also be other players that enter the fray now that they know Z Energy Ltd (ZEL NZ) could consider a deal.

Ampol's NBIO for Z Energy: May Need More to Go Through

Equity Capital Markets

PTT Oil & Retail Business  / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/ptt-oil-and-retail" target="_blank" data-smartkarma-citation="entities:28939:1" rel="noopener">PTT Oil and Retail (OR TB)</a>/PTTOR is the flagship company for the oil and retail business of <a href="https://www.smartkarma.com/entities/ptt-pcl" target="_blank" data-smartkarma-citation="entities:197:1" rel="noopener">PTT PCL (PTT TB)</a> in Thailand and in the Southeast Asia region such as Cambodia, Laos, Myanmar and Philippines. PTTOR is the largest player in Thailand’s fuel retail market. PTTOR priced its IPO at THB18.00 per share, at the upper end of its IPO price range of THB16.00-18.00 per share. The shares are set to start trading on Thursday, 11 February. </p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-pttor-ipo-initiation-octane-ratings" target="_blank" data-smartkarma-citation="insights:46230" rel="noopener">PTT Oil and Retail (PTTOR) IPO Initiation: Octane Ratings</a>, we stated that PTTOR remains a market-leading business and well-placed to ride the recovery in oil prices, easing of lockdown restrictions and consumer confidence.</p>
<div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-pttor-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:47147" rel="noopener">PTT Oil and Retail (PTTOR) IPO: Valuation Insights</a>, we opined that a reasonable P/E valuation and solid cornerstone support makes PTTOR tempting at the proposed pricing range. Our base-case DCF derived price target of THB22.20 per share. Our valuation analysis shows that the IPO price remains attractive.</p></div>
</div>

PTT Oil and Retail (OR TB)/PTTOR is the flagship company for the oil and retail business of PTT PCL (PTT TB) in Thailand and in the Southeast Asia region such as Cambodia, Laos, Myanmar and Philippines. PTTOR is the largest player in Thailand’s fuel retail market. PTTOR priced its IPO at THB18.00 per share, at the upper end of its IPO price range of THB16.00-18.00 per share. The shares are set to start trading on Thursday, 11 February. 
In PTT Oil and Retail (PTTOR) IPO Initiation: Octane Ratings, we stated that PTTOR remains a market-leading business and well-placed to ride the recovery in oil prices, easing of lockdown restrictions and consumer confidence.
In PTT Oil and Retail (PTTOR) IPO: Valuation Insights, we opined that a reasonable P/E valuation and solid cornerstone support makes PTTOR tempting at the proposed pricing range. Our base-case DCF derived price target of THB22.20 per share. Our valuation analysis shows that the IPO price remains attractive.


PTT Oil and Retail (PTTOR) IPO: Trading Debut

<div><p><a href="https://www.smartkarma.com/entities/ptt-oil-and-retail" target="_blank" data-smartkarma-citation="entities:28939:1" rel="noopener">PTT Oil and Retail (OR TB)</a>/PTTOR is the flagship company for the oil and retail business of <a href="https://www.smartkarma.com/entities/ptt-pcl" target="_blank" data-smartkarma-citation="entities:197:1" rel="noopener">PTT PCL (PTT TB)</a> in Thailand and in the Southeast Asia region such as Cambodia, Laos, Myanmar and Philippines. PTTOR is the largest player in Thailand’s fuel retail market.</p></div><div><p>PTTOR has launched its IPO at a price range of THB16.00-18.00 per share to raise as much as THB47.0 billion ($1.6 billion). Cornerstone investors will account for around two-thirds of the offer shares. Nine international cornerstones which include Fidelity, JP Morgan Asset Management and GIC will take up $270 million of the offer shares. Nineteen domestic cornerstone investors will take up $758 million of the offer shares. The books will open on 22 January and the first day of trading is set for 11 February. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-pttor-ipo-initiation-octane-ratings" target="_blank" data-smartkarma-citation="insights:46230" rel="noopener">PTT Oil and Retail (PTTOR) IPO Initiation: Octane Ratings</a>, we stated that PTTOR remains a market-leading business and well-placed to ride the recovery in oil prices, easing of lockdown restrictions and consumer confidence. Overall, we think that a reasonable P/E valuation and solid cornerstone support makes PTTOR tempting at the proposed pricing range. </p></div></div></div>

PTT Oil and Retail (OR TB)/PTTOR is the flagship company for the oil and retail business of PTT PCL (PTT TB) in Thailand and in the Southeast Asia region such as Cambodia, Laos, Myanmar and Philippines. PTTOR is the largest player in Thailand’s fuel retail market.PTTOR has launched its IPO at a price range of THB16.00-18.00 per share to raise as much as THB47.0 billion ($1.6 billion). Cornerstone investors will account for around two-thirds of the offer shares. Nine international cornerstones which include Fidelity, JP Morgan Asset Management and GIC will take up $270 million of the offer shares. Nineteen domestic cornerstone investors will take up $758 million of the offer shares. The books will open on 22 January and the first day of trading is set for 11 February. In PTT Oil and Retail (PTTOR) IPO Initiation: Octane Ratings, we stated that PTTOR remains a market-leading business and well-placed to ride the recovery in oil prices, easing of lockdown restrictions and consumer confidence. Overall, we think that a reasonable P/E valuation and solid cornerstone support makes PTTOR tempting at the proposed pricing range. 

PTT Oil and Retail (PTTOR) IPO: Valuation Insights

Australia

Ampol Limited provides petroleum products. The Company offers petrol and convenience network as well as refining, importing, and marketing fuels and lubricants. Ampol serves defence, mining, transport, marine, agriculture, aviation, and other commercial sectors in Australia.

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Ampol (ALD AU)

Ampol Lobs an Offer for Z Energy

Z Energy revealed a non-binding indicative proposal from Ampol at NZ$3.78 per share. We suspect that there is some upside to the final offer price....

Arun George

Z Energy (ZEL NZ) Tentatively Backs Ampol's Approach

The Offer still looks light, most noticeably when compared to pre-Covid levels. It is ZEL's intention to grant DD to flesh out a bump. Ampol is...

David Blennerhassett

Ampol's NBIO for Z Energy: May Need More to Go Through

Ampol has submitted a non-binding indicative proposal to buy Z Energy at HK$3.78/share in cash. We feel that the deal will go through with a bump....

Brian Freitas

PTT Oil and Retail (PTTOR) IPO: Trading Debut

PTTOR priced its IPO at THB18.00 per share and the shares are set to start trading on 11 February. Our valuation analysis shows that the IPO price...

Arun George

PTT Oil and Retail (PTTOR) IPO: Valuation Insights

PTTOR has launched its IPO to raise as much as THB47.0 billion ($1.6 billion). A reasonable P/E valuation and solid cornerstone support make PTTOR...

Arun George

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