Following the purchase of Kiwi independent fuel retailer Gull New Zealand, Caltex Australia is expected to move to lift its market share there, potentially through additional acquisitions, with most attention focused on acquiring Mobil Oil NZ.
On Thursday, Caltex said it is to buy discounter Gull New Zealand for $NZ340 million ($324 million), marking the Australian group's first acquisition offshore and giving it a 5 per cent share of the New Zealand market.https://99.fairfax.com.au/cf#/etc/author-util.html?assetId=gtg98y
![Caltex is tipped to buy up more assets in New Zealand after buying Gull.](/web/20170312203210im_/http://www.brisbanetimes.com.au/content/dam/images/g/t/g/i/j/d/image.related.articleLeadwide.620x349.gth5fs.png/1482462366846.jpg)
Gull New Zealand has its own import terminal in New Zealand's North Island, and it has been frustrated from expanding onto the South Island due to an inability to acquire competitively priced product from the oil majors.
"We believe acquiring Mobil New Zealand may be the real end goal as the Gull business is a very small add-on to Caltex's existing business," Forsyth Barr analyst Andrew Harvey-Green told clients in a research note.
"Gull only adds around 2 per cent to Caltex sales volumes. At the very least acquiring Gull means Caltex becomes the natural buyer of Mobil."
ExxonMobil sought to sell its New Zealand arm, Mobil Oil, which has around 20 per cent of the local market, in 2010. Along with close to 200 petrol stations, it also has a 17 per cent in New Zealand Refining, which would be of little interest to Caltex which closed its Kurnell refinery in 2014 with a question mark hanging over the future of its Lytton refinery in Brisbane.
At around the same time, Shell put its New Zealand fuel retailing arm on the block, including its stake in NZ Refining, which was eventually sold for $NZ700 million.
Pushing Caltex to expand in New Zealand is the prospective loss of its deal to supply Woolworths petrol stations.
Caltex is believed to be the underbidder to acquire the Woolworths fuel retailing business, raising concerns about a sizeable loss of earnings, which it is now seeking to replace by acquisitions, including Gull.
"Gull is employing a price discounting strategy to aggressively grow volumes in NZ which has historically averaged double-digit volume growth for the business," Citi analysts told clients on Friday. "We understand that Gull has been building five-10 retail sites per annum to support this growth, with the strategy relatively immature given its market share.
"We understand Caltex does not intend to alter the high-margin volume growth strategy which is clearly working. What Caltex can offer is its balance sheet to facilitate further growth (more retail sites) [and] potentially expanding to the South Island if it can access infrastructure for supply at a price which enables a margin high enough to facilitate its low price strategy."