Ampol Limited (ASX:ALD) to Acquire EG Australia for $1.1 Billion
Transaction Overview
Ampol Limited (ASX:ALD) has entered into a Share Purchase Agreement to acquire 100% of EG Australia for a headline price of $1.1 billion. The acquisition includes approximately 500 Ampol-branded company owned and operated sites, accelerating Ampol’s retail growth strategy through an expanded Ampol Foodary brand and a value-oriented U-GO branded offer at scale.
Financial Details
The acquisition consideration consists of approximately $800 million in cash from existing debt facilities and $250 million in Ampol shares issued to the vendor, subject to escrow arrangements. The deal offers compelling financial metrics, including a post-synergy multiple of 5.8x and targeted synergies of $65-80 million. The transaction is expected to deliver high single-digit proforma adjusted earnings per share accretion and double-digit proforma free cash flow per share accretion.
Executive Comments
Ampol’s Chairman, Steven Gregg, said: “EG Australia is a logical growth opportunity for Ampol given our long-term relationship and its ability to complement our Australian Convenience Retail growth strategy. This is great for both our consumer and business customers. This has been achieved whilst maintaining our commitment to financial discipline. The combined network will have greater scale and significant cost synergies that will support strong returns and earnings growth for our shareholders. The Ampol management team has built up an impressive operating capability over the last 5-7 years, as demonstrated by the consistent track record of organic earnings growth in our Convenience Retail business and the successful acquisition of Z Energy which continues to deliver value to the Group beyond its investment case. Similarly, the rollout of Foodary and U-GO offerings demonstrate the ability of the team to execute on the agreed strategy. The Board has every confidence that this opportunity will provide significant benefits to our customers and shareholders.”
Ampol’s CEO and Managing Director, Matt Halliday, added: “The proposed EG Australia acquisition makes sense for Ampol. It is a business and market we understand well, given our multi-year relationship with them including fuel supply (~2.3BL per annum) and brand licence agreements. We are uniquely placed to leverage our demonstrated capability as a known and trusted brand in fuel and convenience retailing. A larger, combined network will allow us to better serve a broader customer base – through the expansion of our Ampol Foodary convenience retailing network, the accelerated rollout of our value-oriented U-GO offering, and expansion of the Woolworths Everyday Rewards program. Our successful transition from a largely franchise model, the national rebrand to Ampol, and the ongoing U-GO site conversions demonstrate our ability to manage organisational and operational change effectively and support strong returns. This is the next major step in our strategy to improve the quality of the Ampol Group’s earnings. The benefits of this transaction, will underpin the continued growth of our Convenience Retail business which has delivered more than 5% compound annual growth rate in EBIT over the past five years. Once integrated, we expect the contribution from convenience retail derived earnings, across Australia and New Zealand, to increase to ~65%, while total earnings from marketing-related activities will increase to ~85%.”
Conditions and Timetable
The proposed acquisition is subject to Australian Competition and Consumer Commission (ACCC) approval. Ampol is targeted to complete the transaction by mid-2026 and plans to divest approximately 20 sites as part of the ACCC requirements.
Motley Fool contributor Kiarra Jackson 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 Scott Phillips.
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