ASX-listed Caltex Australia to buy Gull NZ for $340m

Caltex Australia has agreed to buy Gull New Zealand for $340 million, giving the ASX-listed fuels company a foothold on this side of the Tasman with about 5 percent of the market.

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, the Australian company said in a statement to the ASX.

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.

Caltex says it will optimise its infrastructure position, build trading and shipping capability, grow its supply base and enhance its retail fuel offering through a low-risk entry into a new market.

It says the Gull retail network is concentrated in the northern half of the North Island of New Zealand but Gull is well-placed to profitably grow in new sites and through signing up existing petrol stations.

Caltex Australia’s cornerstone shareholder, Chevron, sold out last year as part of the US energy giant’s withdrawal from the region which included its $785 million sale of its New Zealand petrol stations and related assets to Z Energy.

Caltex Australia says it will keep Gull’s brand, management and employees.

Gull was established in 1998 and sells about 300 million litres of petrol a year. It currently has a petrol supply agreement with Mobil.

Z Energy spokesman Jonathan Hill says his company intends to continue using the Caltex brand for the foreseeable future as part of its two-brand strategy.

The Gull sale won’t mean any change for Z Energy because it is simply one Australian company replacing another Australian company as Gull’s owner, Mr Hill says.

Z Energy expects the new owners to provide strong competition in the retail market, he says.

The deal is subject to Overseas Investment Office approval.

Caltex Australia's shares last traded at $A30.81, having dropped 18% so far this year.

NZX-listed Z shares fell 0.7% to $6.98, having gained 4% so far this year.

(BusinessDesk)