Z Energy shares climb after signing
By Sophie Boot
Z Energy shares jumped to a record after the Commerce Commission approved its bid to buy rival Caltex and Challenge! petrol station chains.
The commission said price co-ordination at some stations wasn't enough to turn it down but that regions where Gull stations operate are more competitive.
The competition watchdog's delayed and 3:1 majority decision on the $785 million deal gives Z about 49 percent of the retail transport fuels market and lets NZX-listed Z buy the 'downstream' assets of American oil giant Chevron, which is exiting all but its exploration activities in New Zealand.
Z's clearance includes an undertaking to sell 19 sites and one truck-stop.
The shares climbed 11 percent to $7.90, valuing the company at $3.2 billion.
Matt Goodson, managing director at Salt Funds Management, said the deal was good for Z but bad for consumers.
"It's certainly a major win for some very capable management at Z Energy, and a significant loss for the New Zealand consumer given the very sharp movement in petrol margins in recent years and the fact that massive vertical integration remains in place."
Commission chair Mark Berry told a briefing in Auckland that most of the panel felt Caltex had "simply been a price follower" meaning its exit wouldn't materially change the dynamics of the market in respect of price co-ordination, but accepted there was co-ordination happening in some instances and in some local markets.
Berry emphasised the commission had not seen any evidence of price collusion from petrol chains. The majority view held that it wasn't the commission's role to determine all the impacts of price co-ordination.
Berry said the majority view was the prospect of another bid for the Chevron assets was remote.
Z currently owns some 200 service stations while Caltex has 150 sites.
Z's chief executive Mike Bennetts welcomed the decision, which took 10 months, saying "as a local company we believe buying the business of a global company is good for New Zealand and it's now up to us to prove it."