The moment Australian dealmakers have been waiting for has arrived

Petrol giant Ampol is corporate Australia’s crash test dummy.

One of the country’s two big fuel wholesalers and retailers is the first business buyer to go through the Australian Competition and Consumer Commission’s new merger approval regime for deals of any size.

Someone had to be the first – and there’s no better crash test dummy than Ampol. It is smack bang in the middle of one of the ACCC’s favourite issues (petrol prices) with exactly the sort of fuel consolidation deal on exactly the same target that the ACCC blocked eight years ago.

If ever there’s to be a robust test of a new regime, this is it. The stakes are high for both sides.

Ampol, led by chief executive Matt Halliday, ummed and ahhed about the up-for-grabs EG Group and its 512 petrol stations for years, including back when the portfolio was owned by Woolworths and first put up for sale a decade ago, unsure whether to double down on an unfashionable but essential sector (retail fuel).

It finally bit the bullet, made a $1.1 billion offer, got a sensibly raucous reception from shareholders, and now needs to turn its subject-to-ACCC-approval-offer into a completed deal and value-creative move for investors.

The ACCC, having convinced the government to stiffen its merger process and give it a look at more deals, could use a good test. It’s had the front door open on the new regime, which involves mandatory notification of all M&A deals and ACCC approval before completion, since July 1, only to find that the business acquirers out there prefer the tried-and-tested route while it is still an option.

The only two cases through the new processes were long-term leases – not what you’d normally consider M&A – which is hardly what you’d call a flying start.

The ACCC’s Tom Leuner, executive general manager of its mergers division, promised the applications would start streaming in any minute at a Senate estimates hearing last Thursday night. Ampol’s application landed on Friday.

What does it look like? It’s very well-formed. The application, which Ampol put together with advice from Herbert Smith Freehills Kramer’s local antitrust head Linda Evans, landed with a “remedy offer” to sell 19 nominated petrol stations, including five from the Ampol side of the fence and 14 EG sites (or EG Ampol sites, actually, given EG’s petrol stations already carried both Ampol’s fuel and brand). Ampol’s already in the market seeking a buyer for those orphaned sites.

The formal merger application landed at the ACCC after a hefty pre-consultation process, and a bucketload of supporting documentation, including Ampol and its region-by-region market and competition analysis.

Lawyers across the big firms are running around telling clients that any information they want the ACCC to consider should be submitted upfront under the new regime, rather than trickle in as requested under the old informal clearance process.

The ACCC has had a big team on the job since it was informally notified, including staff who have worked on previous petrol station deals. It went to other fuel (retail and wholesale) industry players for comment on Monday and has 30 business days to accept the deal or determine the competition issues are serious enough to warrant further investigation and kick its investigation into a second phase.

From what we hear, the initial work has been more like a formal merger authorisation process (the sort preferred by ANZ Group when it bought Suncorp Bank or TPG Telecom when it acquired Vodafone), not the usual run-of-the-mill informal clearance that’s been common practice for years.

Ampol’s expected to argue that the market has changed materially since BP tried and failed to buy what’s now EG in 2017.

Back then, EG’s sites were owned by Woolworths, drivers loved their 4¢-a-litre shopper dockets and the Woolworths’ portfolio was a major player at the discount end of the retail fuel market.

Now, shopper dockets are naff and discounting is led by new or resurgent second-tier players including Metro Petroleum, United Petroleum and Pearl Energy, who draw in the more price-conscious drivers with what the supermarkets would call an “everyday low prices approach” and/or keep the other bastards honest (depending on who you ask).

Ampol is concurrently entering this lower-tier market via its new unstaffed U-GO offering, promising to increase its 34 sites to 150 or more in the two years following the acquisition.

The ACCC is also thinking about the deal’s impact on wholesale supply markets – although you’d have to think it is limited, given Ampol already supplied EG’s network.

There are plenty of eyes watching to see whether Ampol can get its deal cleared in this first phase (something you wouldn’t have thought possible under the former framework, given the contentiousness of past petrol station mergers), but more importantly, how the ACCC’s new regime holds up.

Like we said, the ACCC has 30 business days to accept the deal or take it into a longer second phase (at a $1.5 million cost to Ampol). It’s possible the ACCC could extend the 30-day first phase to consider the divestment undertaking, with Ampol already in the market offering those 19 sites to potential acquirers. If the deal gets the green light in 30 days, the transaction could be done and dusted by Christmas.

Lawyers have had plenty to complain about the new regime. They say it is too broad, too expensive, too time-consuming and looks for problems that are almost never there.

Extracted in full from:  https://www.afr.com/chanticleer/the-moment-australian-dealmakers-have-been-waiting-for-has-arrived-20251014-p5n29q