2 Jun 2015

Z Energy buys Chevron NZ for $785m

6:09 pm on 2 June 2015

Z Energy has agreed to buy Chevron's fuel business in New Zealand for $785 million.

The deal includes Caltex's 146 petrol stations and 73 truck stops, Chevron's lubricant business and the Challenge brand.

Z Energy CEO Mike Bennetts

Z Energy CEO, Mike Bennetts. Photo: RNZ / Alexander Robertson

It follows Chevron's sale of its 11 percent stake in New Zealand Refinery to institutional investors last week, as the US company attempts to bolster its financial position to offset declining oil prices.

The proposed deal requires the permission of the Commerce Commission and the consent of the Overseas Investment Office, which Z Energy said was expected to take some months. The company expects the deal to be settled in late 2015.

If completed, the fuel retail sector will shrink from four to three main players - Z Energy, BP and Mobil - with Z Energy holding a dominant position.

The company says it has an estimated 28 percent of the transport fuel market, Caltex 21 percent and the remainder holding 51 percent.

Z Energy says it will continue to operate two brands, though its rights to the Caltex brand will eventually phase out.

The deal will be funded by a mixture of cash and debt, while Z Energy will raise about $185 million from investors.

Earlier this year, Chevron sold its entire stake in the publicly listed Caltex Australia Chevron in a block sale worth $A4.7 billion.

Caltex has 136 privately-owned petrol station that will remain in private ownership, along with 90 Challenge stations.

Z Energy chief executive, Mike Bennetts, said the deal had been a year in the making.

He said the Caltex brand name would be kept for two years and Z Energy's earnings were expected to rise by 34 percent because of the purchase of Chevron.

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