IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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<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 is the market leader in New Zealand and sells 40% of all fuel volumes across New Zealand. Z Energy entered into a binding scheme implementation agreement with <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. Ampol will offer NZ$3.78 per share, which is unchanged from Ampol’s non-binding indicative proposal revealed on 23 August. Ampol has sweetened its bid by also allowing Z Energy to pay a NZ$0.05 per share interim FY22 dividend. Consistent with the previous proposal, the offer continues to include an adjustment mechanism to pay NZ0.055 cents per share per day for each day the transaction extends beyond 31 March 2022, up to a limit of NZ10 cents per share.The total offer price of NZ$3.83 per share represents a 24% premium to the share price on 12 August (prior to receipt of the proposal), a 37% premium to the share price on 26 July (prior to media speculation regarding a bid) and a 48% premium to the share price on 1 June (prior to Ampol’s first rejected proposal).The key conditions are Z Energy shareholder approval and regulatory approvals from the New Zealand Commerce Commission (NZCC) and New Zealand Overseas Investment Office (OIO). Ampol is committed to the full divestment of Gull (trade sale or IPO) to secure NZCC approval. Ampol has agreed a set of commitments with Z Energy to help it secure OIO approval. Deal completion is targeted for 1H22. <div class="content-highlight">As highlighted in <a href="https://www.smartkarma.com/insights/ampol-lobs-an-offer-for-z-energy" target="_blank" data-smartkarma-citation="insights:56534" rel="noopener">Ampol Lobs an Offer for Z Energy</a>, the Board had rejected Ampol’s previous three offers as they did not represent compelling value. Ampol’s total final offer price of NZ$3.83 is a premium to historical EV/EBITDA multiples and post-COVID-19 share prices. Overall, we think Ampol’s final offer will succeed. At the last close price of NZ$3.61, Z Energy’s shares are trading at a 6.1% gross spread to the total offer price.</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 is the market leader in New Zealand and sells 40% of all fuel volumes across New Zealand. Z Energy entered into a binding scheme implementation agreement with Caltex Australia (ALD AU)/Ampol. Ampol will offer NZ$3.78 per share, which is unchanged from Ampol’s non-binding indicative proposal revealed on 23 August. Ampol has sweetened its bid by also allowing Z Energy to pay a NZ$0.05 per share interim FY22 dividend. Consistent with the previous proposal, the offer continues to include an adjustment mechanism to pay NZ0.055 cents per share per day for each day the transaction extends beyond 31 March 2022, up to a limit of NZ10 cents per share.The total offer price of NZ$3.83 per share represents a 24% premium to the share price on 12 August (prior to receipt of the proposal), a 37% premium to the share price on 26 July (prior to media speculation regarding a bid) and a 48% premium to the share price on 1 June (prior to Ampol’s first rejected proposal).The key conditions are Z Energy shareholder approval and regulatory approvals from the New Zealand Commerce Commission (NZCC) and New Zealand Overseas Investment Office (OIO). Ampol is committed to the full divestment of Gull (trade sale or IPO) to secure NZCC approval. Ampol has agreed a set of commitments with Z Energy to help it secure OIO approval. Deal completion is targeted for 1H22. As highlighted in Ampol Lobs an Offer for Z Energy, the Board had rejected Ampol’s previous three offers as they did not represent compelling value. Ampol’s total final offer price of NZ$3.83 is a premium to historical EV/EBITDA multiples and post-COVID-19 share prices. Overall, we think Ampol’s final offer will succeed. At the last close price of NZ$3.61, Z Energy’s shares are trading at a 6.1% gross spread to the total offer price.

Ampol Enters a Binding SIA to Acquire Z Energy

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
Back on the 23 August, 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> announced it had <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>. The Offer of NZ$3.78/share, by way of a Scheme, was a 22% premium to the last closing price, although in 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 was a 35% premium to the last close on the 26 July, the day prior to the first press <a href="https://businessdesk.co.nz/article/markets/z-shy-over-takeover-talk-as-it-promises-to-do-better-again" target="_blank" rel="noopener">speculation</a> of corporate activity. 
Ampol was granted four weeks of exclusive due diligence. On the 27 September, the DD was <a href="https://www.nzx.com/announcements/379821" target="_blank" rel="noopener">extended</a> by a further two weeks. There were rumours in the local press, such as the New Zealand Sun, that Ampol may up its bid to NZ$4/share.
<h3>The New News</h3>
ZEL and Ampol have now <a href="http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/380676/356623.pdf" target="_blank" rel="noopener">announced</a> a binding Scheme of Arrangement under which ZEL shareholders would receive $3.78/share plus NZ$0.05/share in dividends - or NZ$3.83/share all-in. ZEL shareholders will also be entitled to a further NZ$0.10/share in dividends if the takeover is not completed by the end of March.
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<div>
The proposal remains subject to approvals from ZEL's shareholders, 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. It is also conditional on the transition of the Marsden Point fuel refinery to an import-only terminal.
</div>
<div>
Ampol has committed to a full divestment of its Gull service stations in New Zealand to address potential competition issues.
This looks done. OIO approval will likely be the biggest sticking point, although Ampol is already in the good books after receiving OIO approval back in 2017 in its acquisition of Gull.
The shareholder meeting to vote on the Scheme is expected to be held early in 2022 with the transaction expected to be wrapped up in the 1H22. 

</div>


Back on the 23 August, Kiwi fuel distributor Z Energy Ltd (ZEL NZ) announced it had received a non-binding indicative acquisition proposal from Ampol (ALD AU). The Offer of NZ$3.78/share, by way of a Scheme, was a 22% premium to the last closing price, although in Ampol's separate announcement, the Offer price was a 35% premium to the last close on the 26 July, the day prior to the first press speculation of corporate activity. 
Ampol was granted four weeks of exclusive due diligence. On the 27 September, the DD was extended by a further two weeks. There were rumours in the local press, such as the New Zealand Sun, that Ampol may up its bid to NZ$4/share.
The New News
ZEL and Ampol have now announced a binding Scheme of Arrangement under which ZEL shareholders would receive $3.78/share plus NZ$0.05/share in dividends - or NZ$3.83/share all-in. ZEL shareholders will also be entitled to a further NZ$0.10/share in dividends if the takeover is not completed by the end of March.


The proposal remains subject to approvals from ZEL's shareholders, and both the New Zealand Commerce Commission and the New Zealand Overseas Investment Office. It is also conditional on the transition of the Marsden Point fuel refinery to an import-only terminal.


Ampol has committed to a full divestment of its Gull service stations in New Zealand to address potential competition issues.
This looks done. OIO approval will likely be the biggest sticking point, although Ampol is already in the good books after receiving OIO approval back in 2017 in its acquisition of Gull.
The shareholder meeting to vote on the Scheme is expected to be held early in 2022 with the transaction expected to be wrapped up in the 1H22. 



Z Energy (ZEL NZ) Enters Into Scheme With Ampol

<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).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 <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.<div class="content-highlight">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.</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.

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>.
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 <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. 
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.
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:
<blockquote>
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. 
</blockquote>
More below the fold.

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

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.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 <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.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.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.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.

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

New Zealand

Z Energy Ltd. markets petroleum products. The Company offers premium fuel, diesel, petrol, liquefied petroleum gas, bitumen, and lubricants. Z Energy serves airlines, trucking companies, mines, shipping companies, and vehicle fleet operators throughout New Zealand.

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Z Energy Ltd (ZEL NZ)

Ampol Enters a Binding SIA to Acquire Z Energy

Ampol’s total offer price of NZ$3.83 is a premium to EV/EBITDA multiples and post-COVID-19 share prices. Deal close in 1H22. Shares are trading at...

Arun George

Z Energy (ZEL NZ) Enters Into Scheme With Ampol

Currently trading at a gross/annulised return of 5.35/9.4%, assuming early May completion. Not bad, but as this is likely a long-dated deal, I...

David Blennerhassett

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

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