Z sees greater benefits from Chevron acquisition, affirms annual guidance
By Paul McBeth
Sept. 23 (BusinessDesk) - Z Energy, the service station chain, expects greater benefits than previously forecast from
its proposed acquisition of Chevron New Zealand's service stations and says it is running on schedule to integrate the
business if it gets approval from the antitrust regulator. Separately, Z affirmed its annual guidance.
Wellington-based Z sees annual savings of between $25 million and $30 million from acquiring the Chevron assets, up from
earlier estimates of $15 million to $25 million, it said in a statement. The company also lowered the forecast cost of
acquiring the Caltex and Challenge! branded chains to $55 million from $64 million, while saying any delay in the Nov.
30 cut-over date would add an extra $2 million a month.
"It would appear to us that CNZ (Chevron New Zealand) has benefited from a strengthened operating performance during
calendar 2015," chief executive Mike Bennetts said. "Accordingly, Z now expects that the financial performance of CNZ is
stronger than our initial assessment at the time of announcing the proposed acquisition."
The acquisition is currently in the hands of the Commerce Commission, which is reviewing whether Z’s $785 million
acquisition of the Chevron New Zealand network, giving it 49 percent of the retail market, would substantially lessen
Rival Mobil Oil New Zealand has submitted the merger would concentrate fuel discount arrangements, while discount
retailer Gull New Zealand was concerned over the long-term commercial contracts the enlarged group would be able to
command. BP New Zealand warned competition issues would arise in more areas than claimed and recommended Z be forced to
divest stations in those locations.
Z today said the process is proceeding as planned, and was confident the transaction won't substantially lessen
competition. The regulator has indicated it will make a decision on Dec. 18.
Separately, the company affirmed annual replacement cost operating earnings before interest, tax, depreciation,
amortisation and fair value movements to be within $245 million and $265 million. That guidance includes a one-off $24
million charge from additional Customs duties and penalties, and the timing of the Chevron cut-over date, which Z said
was "effectively increasing guidance by maintaining the current range."
The shares last traded at $6.13 and have gained 32 percent this year.