Ampol beefs up retail network with $718.9 million EG Australia deal
Ampol said it would acquire EG Australia through A$800 million in cash, to be funded by existing debt, and proceeds from sale of its shares, valued at A$250 million.
The deal would open the door for Ampol to acquire EG Australia's 500 fuel and convenience sites across the country.
"The combined network will have greater scale and significant cost synergies that will support strong returns and earnings growth for our shareholders," Ampol Chairman Steven Gregg said.
The company estimates savings of about A$65 million to A$80 million from the deal.
Ampol supplies fuel to 80,000 customers across Australia and provides fuel and convenience products to 3 million customers every week through its retail network, according to its website.
"Investors are likely to welcome a scaled-up Ampol that combines greater coverage with a stronger platform for cost efficiency," said Hebe Chen, market analyst at Vantage Markets.
"While risks remain, the valuation and upside for brand strength and business resilience make a compelling case."
Ampol has been actively acquiring fuel networks in recent years, including Z-Energy and SeaOil, although some assets, such as Gull NZ were later divested.
The deal, subject to approval from the Australian Competition and Consumer Commission, will also mark the exit, opens new tab of EG Group from the country it entered in 2019 through the acquisition of the petrol business of supermarket chain operator Woolworths (WOW.AX), opens new tab for $1.25 billion.
The Australian Financial Review first reported the deal earlier in the day.
($1 = 1.5302 Australian dollars)
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