29 Apr 2016

Z Energy's takeover of Caltex approved

4:43 pm on 29 April 2016

The Commerce Commission has approved Z Energy's takeover of rival petrol retailer Caltex.

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Photo: RNZ

The competition regulator said the $785 million deal could go ahead, but Z Energy must divest 19 petrol stations and a truck stop to ensure it did not dominate the fuel market.

It imposed no other conditions, although one of the commissioners raised concerns the takeover would reduce price competition.

Commission chair Mark Berry said there was no evidence to suggest there had been any collusion in the market, which would be an illegal activity.

"We've undertaken extensive analysis of this merger and there's no evidence, that we have from that, that would support or justify us engaging in that kind of investigation."

Z Energy will have about half of the national retail petrol market as a result of the tie-up.

Chief executive Mike Bennetts said the company would need time to assess the financial implications of selling off the petrol stations and truck stop. But there was interest in the company's assets and it "won't be in a situation where we are a distressed seller, at all".

Mr Bennetts said Caltex would continue to operate as a separate identity, while behind the scenes there would be savings of about $25-$30m from IT efficiencies and cost-cutting.

The deal would be funded by a mix of cash and debt.

Caltex's American owners, Chevron, put its local assets up for sale last year as part of a worldwide plan to sell non-core assets.

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