Australia-headed fuel retail and distribution company Ampol Ltd has confirmed that it has submitted a non-binding indicative proposal to acquire 100 percent of the shares of New Zealand based fuel distribution and retailing company, Z Energy Ltd. Z Energy operates a biodiesel plant, owns and manages over 300 fuel stations in New Zealand under the Z and Caltex brands, supplying approximately 4 billion litres of fuel annually.
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According to a statement, Ampol’s proposal follows a period of private discussions which included an initial non-binding indicative proposal of NZ$3.35 per share being submitted on June 2, 2021, with a subsequent proposal of NZ$3.50 per share submitted on July 1, 2021.
In addition to the Offer Price, Ampol’s proposal includes a dividend adjustment mechanism that permits Z Energy to pay a dividend equal to NZ 0.055 cents per share per calendar day, for each day that the transaction extends beyond March 31, 2022, up to a limit of NZ 10 cents per share.
Subject to further discussions with Z Energy, Ampol is also willing to consider an amendment to the current Proposal to include partial Ampol share consideration.
Z Energy is a logical growth opportunity for Ampol as both companies are market leaders in their respective home markets and have very similar business models. A successful acquisition would create an A&NZ leader in fuel, with significant regional scale and trusted and iconic brands on both sides of the Tasman, said Matt Halliday, Ampol’s CEO, and Managing Director.
The Z Energy Board has concluded that it is in shareholders’ best interests to grant Ampol a four-week period for confirmatory due diligence which will be conducted on an exclusive basis subject to customary exceptions.
Although 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. The Board will always act constructively in the best interests of the company and its shareholders, said Abby Foote, Chair, Z Energy.
With assistance from Z Energy, Ampol is now commencing its confirmatory due diligence inquiries, preparation of regulatory approval applications, and the negotiation of a scheme implementation agreement (SIA), with the aim of developing a binding transaction that can ultimately be put to a Z Energy shareholder vote in due course.
The proposed transaction is expected to be subject to a number of customary conditions which include a Z Energy shareholder vote and New Zealand Court and regulatory approvals, namely, obtaining clearance under the New Zealand Commerce Act and Overseas Investment Act.
While the Proposal is developed further and evaluated, Z remains committed to safe and reliable operations, meeting the needs of our customers as well as delivering on the many initiatives we recently announced at our Investor Day to create further value for shareholders, said Mike Bennetts, CEO of Z Energy.
As part of the former clearance process, Ampol intends to commit to a material divestment to ensure any potential competition law issues are fully addressed as a result of the transaction which may include a full divestment of its Gull fuel distribution business in New Zealand.
It is expected that divestments would occur within a prescribed period of time following the completion of the transaction. While Ampol is “confident in its ability” to receive required approvals, there is no guarantee that a binding transaction will be agreed upon between the parties or completed.
Ampol has a strong track record of reliably delivering transport fuels in New Zealand, with NZ$80 million invested since 2016. Should a transaction proceed, Ampol believes that it will bring considerable benefits to the New Zealand market, helping to maintain fuel security and support New Zealand industry. Given the ongoing work of both organizations in energy transition, a combined entity would provide a new, larger platform, supporting the development of lower emissions energy solutions for customers across Australia and New Zealand. We look forward to working with the Z Energy team to complete our confirmatory due diligence such that a transaction can ultimately be put to Z Energy shareholders, said Matt Halliday.
