Z Energy Receives Commerce Commission Approval to Buy Chevron New Zealand

By Kate Geenty 

WELLINGTON, New Zealand--Gas station operator Z Energy has received approval from the New Zealand Commerce Commission to buy Chevron New Zealand, the owner of the Caltex and Challenge brands in New Zealand.

The Commerce Commission's clearance for the 785 million New Zealand dollar (US$546 million) deal to go ahead is conditional on Z Energy selling 19 retail sites and one truck stop, which are in locations where the Commission considers competition would be substantially reduced as a result of the deal.

Z Energy Chief Executive Mike Bennetts said Z Energy would need some time to assess the financial effect of the required divestments and said there are options as to which gas stations are sold. "The volume impact on the combined company ranges between 60-80 million liters per annum. Over the past 11 months, Z has had approaches from numerous parties expressing interest in any assets that may be divested so Z expects competition for these assets," he said.

The Commission said it analyzed the competitive effect of the proposed deal on the supply of fuel to retail and commercial customers and also how it would affect upstream markets associated with refinery, distribution and storage infrastructure.

Commerce Commission Chairman Mark Berry said Chevron had been a passive competitor in New Zealand and had followed the lead of its rivals rather than taking an aggressive approach in pricing. "We consider, by majority, that subject to Z Energy divesting 19 retail sites, Chevron's absence would not make a material difference to the competitive dynamics we currently see, where retail price movements are dominated by Z, BP, Mobil and Gull," Mr. Berry said.

Settlement is expected on June 1. Z Energy expects synergies of between NZ$25 million to NZ$340 million from the acquisition, from improved supply chain efficiency, reduced people costs and a range of IT, systems and process efficiencies.

Write to Kate Geenty at [e-mail].

(END) Dow Jones Newswires

April 28, 2016 17:39 ET (21:39 GMT)

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