The Ampol Ltd (ASX: ALD) share price is fuelled up and zooming higher on Monday.
In afternoon trade, the fuel retailer’s shares are up over 3% to $30.08.
Why is the Ampol share price charging higher?
According to the release, the two parties have agreed on a price of NZ$3.78 cash per share. This represents an enterprise value of NZ$2.8 billion.
In addition, Z Energy shareholders will be entitled to a NZ$0.05 per share interim dividend for FY 2022 that won’t impact the cash offer price.
But it doesn’t stop there. Depending on how long the transaction takes to complete, the offer price could increase. The release explains that if the transaction has not been implemented by 31 March 2022, the final cash consideration will be progressively increased to reflect Z Energy’s FY 2023 performance. This allows for an increase of up to NZ$0.10 per share.
Is this a good deal?
Judging by the Ampol share price performance today, it appears as though the market believes this is a good deal.
And it’s not hard to see why. Z Energy is the market leader in New Zealand with a 40% share of all fuel volumes. As a result, Ampol believes that acquiring Z Energy will create a “Trans-Tasman fuel champion.”
Management is also forecasting significant transition and synergy opportunities totalling NZ$60 million to NZ$80 million. These are expected to be achieved via fuel procurement and overhead cost reductions.
This is expected to lead to the transaction being double digit earnings per share accretive and +20% free cash flow accretive in 2023.
The Ampol share price is now up 22% over the last 12 months.
Should you invest $1,000 in Ampol right now?
Before you consider Ampol, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Ampol wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
- Z Energy (ASX:ZEL) share price leaps 6% on Ampol takeover news
- Ampol (ASX:AMP) share price on watch after Z Energy takeover agreement
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/3mIdcd7