ComCom has concerns over Ampol's Z bid

Z Energy shares slid after the Commerce Commission reiterated concerns about Ampol’s $2 billion takeover of the company.

Friday, December 24th 2021, 9:49PM

by BusinessDesk

The fuel company was among the few companies that attracted any interest on a quiet Christmas Eve when the S&P/NZX 50 Index increased 0.2% or 25.7 points to 12888.41.

Turnover was a light $46.1 million in a shortened trading day.

Z Energy ended down 1.2% at $3.45.

Australian-owned Ampol wants 100% of New Zealand’s largest fuels retailer and has offered to divest itself of its Gull business in this country. The options for divestment could include an initial public offering or a trade sale.

Ampol and Z have a binding scheme implementation agreement to acquire 100% of Z at $3.78 per share, or $1.97b. On top of that, Ampol will pay an extra 0.055 cents for every day past March 31 to a maximum of 10 cents per share, or $52m, after roughly 181 days. That’s just before Oct 11, 2022, the end date for the agreement to expire.

A statement of issues from the commission outlines potential competition problems with the acquisition following its initial investigation, including in relation to the proposed divestment undertaking.

“We have preliminary concerns that the proposed divestment undertaking is not sufficient to address the competition concerns that could arise from the proposed acquisition,” it said.

It noted the issues statement is not a final decision and does not mean the Commission intends to decline or clear the acquisition.

It is now seeking submissions.

“They do not appear very enthused about any IPO of Gull,” said Matt Goodson, director at Salt Funds Management. “They still see Ampol has having significant influence over Gull afterwards.”

As a result a “trade sale is far more likely” but the commission does appear concerned that the purchaser would still have an impact on pricing in the market, he said.

According to Goodson, however, Z hasn’t fallen much below the implied price which suggests the market view is that a deal is still more likely than not but may take some time.

Outside of Z Energy, investors may have been cheered by strong offshore leads, said Goodson. He also noted that KiwiSaver changes that have seen some investors move from conservative to balanced funds is also driving the market.

Among other stocks, AMP rose 5% to $1.05 after the financial services firm agreed to sell its infrastructure debt platform to Ares Holding for A$428m. AMP is delisting from the NZX in February.

Financial stocks bounced back on both sides of the Tasman after the recent sell down of Australian fund manager Magellan Financial after it lost a major investment mandate. ANZ advanced 1.4% to $29.29 and Westpac gained 1.8% to $22.71. Fintech Harmoney was unchanged at $1.90, while Heartland Group increased 0.9% to $2.34.

Healthcare companies remained supported by the uncertain omicron outlook, with Fisher & Paykel Healthcare unchanged at $32.85, Ebos Group rising 0.7% to $40.08 and Pacific Edge advancing 1.6% to $1.31.

Tech companies were also stronger, taking their cues from across the Tasman. Vista Group International rose 0.9% to $2.27, Serko was unchanged at $6.99, Gentrack climbed 3.6% to $2.03 and Plexure advanced 2% to 50 cents.

Restaurant Brands was again the weakest stock on the top 50, falling 3.2% to $13.80.

Outside the benchmark index, MHM Automation fell 3.1% to 62 cents on heavier trading than usual, with more than a million shares changing hands. Earlier this week, director Colin Neal reduced his stake in an off-market transfer of 2.2 million shares, leaving him with almost 10m shares, or about 15% of the firm.

On the currency front, the New Zealand dollar pushed slightly higher to US$68.21 at 1:15pm in Wellington, up from $68.08 at 3pm yesterday on light flow.

Tags: Market Close