Australian fuel company Ampol has slightly raised its takeover price for Z Energy enough to win the backing of the company's board.
Photo: RNZ
The Z Energy board has unanimously recommended Ampol's offer of $3.83 a share, which has been boosted by Ampol agreeing to the payment of 5 cents a share of the next dividend.
The deal values Z Energy at about $2 billion.
"The Z Board unanimously recommends that shareholders vote in favour of the scheme, subject to the scheme consideration being within or above the valuation
range specified by the independent advisor and in the absence of a superior proposal being made for Z," the company said in a statement.
The payout would increase by another 5 cents a share if the deal is not settled by the end of March next year.
Ampol will also divest local small fuel retailer Gull Petroleum, and also wants confirmation of the Marsden Point refinery becoming an import only facility.
Z Energy chair Abby Foote said the offer was in shareholders' best interests and represented fair value.
"The board has been focussed on the best interest of Z shareholders and has engaged constructively with Ampol over several months to secure additional value beyond the initial approach in June."
"The board took the opportunity to obtain feedback from shareholders on the proposal and that has played an important role in finalising the terms of the deal," she said..
Ampol made three early offers between $3.35 and $3.60 a share, all of which were rejected by Z's board, before the final $3.78 price.
The deal is being done through a scheme of arrangement which allows for a full takeover with a lower level of shareholder approval. A fee of $20m is payable if the takeover does not go ahead, although who would pay depends on the circumstances.
'Scale benefits' to Z
Z chief executive Mike Bennetts said there would be benefits to the business and consumers from the takeover,
"Z will be able to tap into Ampol's significant supply chain, including trading and shipping operations, that will deliver scale benefits."
"Ampol's focus on a low carbon energy future will add expertise to Z's already well developed work in this area," he said.
Ampol said it would look to list on the NZX when the takeover was completed.
Z Energy had been seen as a cheap takeover prospect as its shareprice slumped over the past two years in the face of falling earnings and profits as oil prices and margins have fallen and Covid-19 hit demand.
The deal needs approval from shareholders, the Overseas Investment Office, and the Commerce Commission.
Ampol said the takeover of Z Energy was a good growth step which would create an operator with the scale giving better fuel security to New Zealand and to work on lowering emissions.
Chief executive Matt Halliday said there would be a "light touch integration" and Z would operate as it currently does.
"Z Energy will operate largely independently, as a subsidiary of Ampol, with the Z brand maintained and retention of key personnel a priority."