New Zealand-listed fuel supplier Z Energy has finally received Commerce Commission clearance to by 100% of Caltex New Zealand as long as it meets some conditions.
The conditions were not seen as onerous by brokers yesterday. As part of securing clearance, Z will sell 19 retail service station businesses and one truck stop.
Z Energy chief executive Mike Bennetts said the company would need time to assess the financial impacts of those divestments, given there were options as to which branded service station was divested.
The volume impact on the combined company ranged between 60million litres and 80million litres a year.
"Over the past 11 months, Z has had approaches from numerous parties expressing interest in any assets that may be divested, so Z expects competition for these assets.''
Z, which was formed from the retail and other downstream assets of Royal Dutch Shell's New Zealand operation, must close retail sites in the following locations: Northland (3), Auckland (1), Waikato (3), Bay of Plenty (1), Wellington (1), top of the South Island (2), Christchurch (3), Canterbury outside Christchurch (4), and one in Otago.
A truck stop in Kawerau is also to be sold.
Craigs Investment Partners broker Chris Timms said the share prices rose immediately on the news, a welcome relief to the shareholders who had held on during the protracted clearance process.
Gull, in the North Island was a prospective buyer of Z stations.
Another possibility was Nelson Petroleum Distributors, which was upgrading the Waihola service station.
Other independents were also interested, he said.
Z could use the sale proceeds to offset the cost of the purchase of the Chevron-Caltex assets, leaving it with 49% of the market.
"It does mean Z cannot grow any more by acquisition and it will have to acquire increased volume in an increasingly competitive market. It is a good result for the company,'' Mr Timms said.
A team of more than a 100 people from Z and Chevron-Caltex had worked for nearly a year on planning and technology solutions to bring the two companies together to operate as one from settlement, which was expected to be on June 1.
Mr Bennetts said it would be business as usual both before and after settlement for customers of both companies, who should notice no impact or change as a result of the way those teams had worked.
There was still a substantial amount of work to be completed in order to fully integrate the Caltex business into Z's corporate structure and business operations.
The technical systems cutover was scheduled to take place overnight on May 31 and the June 1 settlement day would be the first day the two companies would operate under common ownership.
The total purchase price of $785million, plus working capital, would be funded from $115millon of cash and $670million of debt.
At a glance
• Z Energy gets clearance to buy Caltex NZ for $785million.
• The dual brands will continue.
• Caltex staff had 12 months minimum paid employment guaranteed.
• Z Energy must sell 19 service stations and one truck stop.
