Ampol will acquire New Zealand’s Z Energy for NZ$3.78 a share. The transaction will be funded from debt and include a new $600m hybrid debt issue. UBS observes this should substantially reduce the risk that the company will need to raise equity to fund the transaction.
The broker likes the rationale as the acquisition will increase the company’s short fuel position and it can better utilise infrastructure in Australia.
There remains some risk regarding regulatory approvals, which could take longer than expected because of Ampol’s commitment to divest Gull NZ. Buy rating and $34.50 target maintained.
Sector: 0.
Target price is $34.50.Current Price is $30.00. Difference: $4.50 – (brackets indicate current price is over target). If ALD meets the UBS target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
