About Z

Z Energy Board unanimously recommends Scheme of Arrangement with Ampol

11/10/2021 - General News

Z Energy Limited (NZX/ASX: ZEL) (“Z”) has entered into a binding Scheme Implementation Agreement with Ampol Limited (ASX: ALD) (“Ampol”) under which it is proposed that Ampol acquire all the shares of Z by means of a Scheme of Arrangement (“the Scheme”).


  • Under the Scheme, Z shareholders would receive a cash offer price of NZ$3.78 per share and will also receive the first NZ$0.05 per share of the interim FY22 dividend without adjusting the cash offer price, resulting in overall value to Z shareholders of NZ$3.83 per share.
  • If the Scheme has not been implemented by 31 March 2022, the final cash consideration will be progressively increased to reflect FY23 performance, up to a limit of NZ$0.10 per share.
  • The Z Board unanimously recommends that shareholders vote in favour of the Scheme, subject to the Scheme consideration being within or above the valuation range specified by the independent advisor and in the absence of a Superior Proposal being made for Z (as defined in the transaction agreement).
  • The Scheme is subject to a number of conditions including regulatory approvals from the New Zealand Commerce Commission (NZCC) and New Zealand Overseas Investment Office (OIO).


On 23 August 2021, Z announced that it had received a proposal from Ampol to acquire all the shares of Z at an offer price of $3.78 per share (subject to adjustment for any dividends paid and a mechanism to increase the Cash Consideration progressively up to a maximum of NZ$0.10 per share if completion occurs after 31 March 2022).

The proposal from Ampol followed earlier unsolicited, confidential and non-binding indicative proposals in the form of letters or verbal communications to Z for $3.35, $3.50 and $3.60 per share.

The Z Board considered that the earlier proposals did not value Z’s business sufficiently to justify the requested exclusivity or confirmatory due diligence access. However, the Board’s assessment of the last proposal was that it would be in the best interests of the company and shareholders to grant Ampol a four-week period of exclusivity (subject to the usual exceptions) to undertake due diligence, to further develop their proposal, and for the parties to negotiate transaction documentation.

On 27 September 2021 Z announced that the exclusivity period had been extended to 11 October 2021 to allow both parties to agree transaction documentation. Z and Ampol have now concluded those negotiations and have entered into a binding scheme implementation agreement (“SIA”).

Details of the Scheme

Under the Scheme, Z shareholders will be entitled to receive NZ$3.78 in cash consideration per share (subject to the adjustments set out below) (“Cash Consideration”).

Z and Ampol have agreed that Z will be entitled to pay dividends in respect of the full or part FY22 financial year reflecting Z’s financial performance during the period up to implementation of the Scheme.

The Scheme terms provide that the first NZ$0.05 per share of the interim FY22 dividend would not be deducted from the final Cash Consideration, which represents additional value for Z shareholders. Any other dividends paid by Z in respect of any full or part FY22 period would be deducted from the final Cash Consideration payable by Ampol.

If the Scheme has not been implemented by 31 March 2022, the final Cash Consideration (after the adjustments mentioned above) will be increased by a rate of NZ$0.00055 per share per day for each day that implementation extends beyond 31 March 2022, up to a limit of NZ$0.10 per share.

Assuming an interim distribution for FY22 of at least NZ$0.05 per share is made in November 2021, the total value derived by Z shareholders under the Scheme will be NZ$3.83 per share before accounting for any increase in cash consideration post 31 March 2022, which represents:

  • a 37.8% premium to the one month volume weighted average price (“VWAP”) up to 28 July 2021 (being Z’s Investor Day) of NZ$2.78 per share; and
  • an increase of NZ$0.48 per share (approximately 14.3%) to Ampol’s initial offer of $3.35 per share.

The Scheme is subject to customary conditions, a condition relating to the transition of the Marsden Point refinery to an import-only terminal, regulatory approvals from NZCC clearance and OIO approval, shareholder approval and ultimately approval by the High Court of New Zealand.

Completion is expected to occur, after regulatory approvals have been obtained, in the first half of 2022. In respect of its New Zealand Commerce Commission clearance application, Ampol has committed to the full divestment of its New Zealand business “Gull”, subject to acquiring Z Energy.

Ampol is also committed to delivering appropriate benefits to New Zealand to support the approval of the transaction by the OIO. The Z Board and management will support Ampol through the necessary regulatory stages with the NZCC and OIO.

Under the SIA, Z is bound by customary exclusivity provisions, subject to the fiduciary obligations of the Z directors and ‘notification’ obligations as well as ‘matching’ rights in favour of Ampol.

A break fee of $20m will be payable by each party in certain circumstances and a regulatory approval break fee of $20m will be payable by Ampol where key regulatory consents are not met within 12 months and the Scheme is terminated.

Ampol has also indicated that it expects to apply for a secondary listing to the NZX Main Board following implementation of the Scheme.

Z Board unanimous recommendation and voting intentions

Z’s Board of Directors unanimously recommend that shareholders vote in favour of the Scheme and intend to vote shares controlled by them in favour of the proposed transaction.

The Z Board of Directors’ recommendation and voting intention is subject to the scheme consideration being within or above the Independent Adviser’s value range, and no superior proposal being received by the company.

Z Energy Chair Abby Foote said, “The Z Board is unanimous in recommending this offer to Z shareholders. The Board has been focussed on the best interest of Z shareholders and has engaged constructively with Ampol over several months to secure additional value beyond the initial approach in June. The Board took the opportunity to obtain feedback from shareholders on the proposal and that has played an important role in finalising the terms of the deal.

The Z Board believes that the scheme represents fair value for Z shareholders. The Board is also satisfied that Ampol will continue to invest in New Zealand’s energy transition towards a low carbon future and its scale will deliver advantages for the fuel industry in New Zealand.”

Mike Bennetts, CEO for Z added, “Z and Ampol share a focus on safe and reliable operations and delivering for our customers. Z will be able to tap into Ampol’s significant supply chain, including trading and shipping operations, that will deliver scale benefits to Z. Ampol’s focus on a low carbon energy future will add expertise to Z’s already well-developed work in this area. In the meantime, Z will stay focused on running the business and delivering on the relevant strategic objectives that we discussed at Z’s Investor Day in July."

Proposed timetable and next steps

A scheme booklet, which will contain important information relating to the Scheme and the shareholder meeting to vote on the Scheme, including the reasons for the Z Director recommendation, and the Independent Adviser’s Report from Calibre Partners (previously KordaMentha NZ), is being prepared to be sent to Z shareholders.

The shareholder meeting to vote on the Scheme is expected to be held early in 2022. Given the need for key regulatory consents to be obtained Ampol is targeting implementation of the Scheme in the first half of 2022.

Z is being advised by Goldman Sachs and Chapman Tripp. Z will continue to keep the market informed in relation to the scheme in line with its continuous disclosure obligations.

At this time Z shareholders do not need to take any action.

Z Energy hosted an investor briefing at 11.00am on Monday 11 October. A replay of the briefing will be made available on Z’s investor centre.

Enquiries: Matt Hardwick — matt.hardwick@z.co.nz027 787 4688