AA says Caltex Australia purchase of Gull NZ could be good news
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Caltex Australia's purchase of Gull New Zealand for $340 million could increase competition, says the AA.
Sydney-based Caltex will take over Gull's 77 retail sites, 22 supply sites and Gull's import fuel terminal in Mount Maunganui, subject to regulatory approvals, in the second quarter of next year.
It would give the ASX-listed fuels company a foothold on this side of the Tasman with about 5 per cent of the market.
AA Petrolwatch spokesman Mark Stockdale said Gull had struggled to expand beyond the upper North Island to Wellington and the South Island.
Caltex had deeper pockets and could fund expansion and provide around one million motorists with more choice, as long as it stuck to its price leader strategy, he said.
The deal represents an earnings multiple of about 8.2 times Gull's forecast earnings before interest, tax, depreciation and amortisation in 2017, and is expected to lift Caltex's earnings per share in the first full year of ownership.
"This acquisition delivers on Caltex's strategic plan as it optimises Caltex's infrastructure position, builds trading and shipping capability, grows the supply base and enhances Caltex's retail fuel offering through low-risk entry into a new market," it said.
"Whilst its retail network is concentrated in the northern half of the North Island of New Zealand, Gull is well placed to profitably grow via new-to-industry and/or new supply site expansions."
Caltex Australia gained control over its destiny after cornerstone shareholder Chevron exited last year as part of the US energy giant's withdrawal from the region, which included selling its downstream New Zealand assets.
The deal follows Z Energy's acquisition of Chevron's Caltex-branded New Zealand network for $785m, which was at an earnings multiple of 5.9 times Caltex's replacement cost operating earnings. The regulator cleared Z to buy the assets in April, provided it sold 20 sites.
Caltex Australia said it will keep Gull's brand, management and employees. Gull was set up in 1998 as a challenger brand, and sells about 300 million litres of petrol and diesel a year, including "numerous" commercial customers. Its Mount Maunganui terminal is the country's biggest facility of its kind with 90 million litres of storage.
The deal is subject to Overseas Investment Office approval.
Caltex Australia's shares last traded at A$30.81, having dropped 18 per cent so far this year.
NZX-listed Z shares fell 0.7 per cent to $6.98, having gained 4 per cent so far this year.