IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

Arun has over 15 years’ experience covering the Technology sector. During this time, he has worked with technology start-ups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group and Clear Capital. He has a dual Master’s degree in Financial Engineering and Industrial and Operations Engineering from the University of Michigan. He obtained his Bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He is also a CFA charterholder.

IPOs and Catalysts/Events

Z Energy Scheme Meeting on 25 March, IE Opinion

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Global Equity Research Ltd

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Event-Driven

<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