The deal will be partly paid for by a pro rata capital raising of $185 million from shareholders.
Z Energy has more than 200 outlets and with the Chevron purchase will gain 147 Caltex outlets and 73 Challenge truck stops.
Synergy benefits from combining the companies but retaining the two brands, are expected at between $15 million and $25 million a year, from savings in operating expenses and fuel procurement benefits.
Shares in Z Energy rocketed after the announcement, from $5.55 to $6.15.
Shares in Infratil, which owns 20% of Z Energy, rose 3% to $3.40.
Caltex stations are independently owned and the purchase will result in Z Energy supplying almost 50% of the country's fuel.
Craigs Investment Partners broker Peter McIntyre said the purchase was expected to be earnings accretive, boosting earnings before interests, tax, depreciation, amortisation and financial instruments (Ebitdaf) by 52%, and boosting after-tax profit by 46%.
He said it was beneficial for investors that yesterday Z Energy had clarified it would maintain its dividend policy, of paying out 80% of the its after tax profit.
''That will help, given Z has been as dividend earner for investors in the past,'' Mr McIntyre said.
Similarly, he expected it would be favourable to investors when Z Energy went to the market to raise up to $185 million towards the purchase.
Forsyth Barr broker Suzanne Kinnaird said the transaction was good for Z Energy, the price appeared good and there were significant benefits from combining Z Energy and Chevron.
She said the acquisition price of $785 million would increase to $867 million after transaction costs, transition capital expenditure and operating expenses were included.
She said Commerce Commission approval was required and not expected until later in 2015, and Overseas Investment Office consent was also required.
''Z Energy [is] confident that it will receive approval,'' Ms Kinnaird said.
While Z Energy was aiming to take control on November 30, that depended on approval timing and whether it was ready to take over, as it had until March 31 next year to get ready, Ms Kinnaird said.
Chevron announced last week that it was selling its 11% stake in the Marsden Point oil refinery, BusinessDesk reported.
With the sale of its retail chain, the US-based oil giant is effectively exiting the New Zealand downstream fuels market, although it took an inaugural stake in an offshore oil and gas exploration permit last year.
Z Energy chief executive Mike Bennetts said in a statement the New Zealand transport fuel market ''is and will remain highly competitive.''
''As New Zealand knows, Z and Caltex are only two players in a very dynamic marketplace, in which there are currently five importers of refined fuel and crude oil and where motorists have the choice of at least a dozen fuel retailers.''
Mr Bennetts said the regulatory processes were expected to take several months, and the company will continue as usual.
Chevron New Zealand Holdings reported a net profit of $43.3 million in calendar 2014 on revenue of $2.23 billion, down from a profit of $86.5 million on sales of $2.34 billion in 2013.
Chevron's total assets were valued at $573.9 million and liabilities totalled $374.4 million as at December 31, compared with assets worth $784.9 million and liabilities of $536 million a year earlier.
Z Energy last month reported replacement cost earnings before interest, tax, depreciation, amortisation and fair value adjustments, the company's preferred earnings measure, rose to $241 million in the year ended March 31, from $219 million a year earlier.
Statutory net profit tumbled 93% to $7 million, which Z Energy said was negatively impacted by the 61% drop in the price of crude oil and refined fuels during the financial year, Business Desk reported.
Paying for purchase
Z Energy financing to buy Caltex for $785 million
$80m - cash.
$540m - additional bank lending.
$185m - pro rata equity raising from shareholders.
SOURCE: Z ENERGY
