The Ampol Ltd (ASX: ALD) share price is up 2% after its EG Australia acquisition was approved by the ACCC.
Ampol describes itself as the nation’s leading transport energy provider. It supplies the country’s largest branded petrol and convenience network, as well as refining, importing and marketing fuels and lubricants. It also has electric vehicle charging and home electricity solutions.
ACCC approval for EG Australia acquisition
The business announced that the Australian Competition and Consumer Commission has approved Ampol’s acquisition of EG Australia.
The ASX share noted that Ampol has entered into a binding agreement to sell the 41 sites to Metro Petroleum. The ACCC’s approval is conditional on Ampol committing to sell these sites.
Ampol has exercised its option to cash settle the share component of the purchase price, resulting in a net cash consideration payable to the seller of EG Australia of $1.115 billion.
Ampol said that shareholders will receive the full benefits of attractive earnings and cash flow per share metrics.
The ASX share said that there are compelling financial metrics, with targeted synergies of between $65 million to $80 million as a result of the deal.
Ampol believes that a larger, combined network will allow it to better serve a broader customer base, through the expansion of its Ampol Foodary convenience retailing network, an accelerated rollout of its value-oriented U-GO offering, and expansion of the Woolworths Group Ltd (ASX: WOW) rewards program.
Management comments
Ampol Managing Director and CEO Matt Halliday said:
This transaction is a major step in delivering Ampol’s strategy by strengthening our retail network and enhancing our segmented customer offer. The performance of our existing U-GO sites also gives us greater confidence in delivering the expected synergies from the transaction and creating value for Ampol shareholders.
EG Australia is a business that we know well, and the acquisition is consistent with our strategy to grow higher quality, more predictable retail fuel and convenience earnings.
We are well advanced in our preparations for integration and look forward to welcoming the EG Australia team into Ampol.
Final thoughts on the Ampol share price
The Ampol share price is up more than 30% in the past year – it has largely hung onto the share price gain following the start of the Middle East conflict.
The positive of this deal going ahead has seemingly already been priced in by the market. I’d be happy as a shareholder, but I think there could be better buys elsewhere that haven’t risen as much.
