It is one of the richest families in the country, and now the low-profile Rae family of Perth has pocketed more than $300 million from the sale of its New Zealand fuel retailing business to Caltex Australia.
In 2010, the family sold its Gull petrol retailing operations in Western Australia for an estimated $500 million
Now it has offloaded its Kiwi interests, Gull New Zealand, for $NZ340 million ($324 million) to Caltex Australia.
A few years after the sale of the WA operations in 2010, the Rae family’s fortune was estimated by The West Australian newspaper at $392 million, which has been pumped up significantly with Thursday’s sale.
The family moved into petrol retailing in the 1970s after Gull’s founder, Fred Rae, had spent time working in both the house building game as well as building grain silos.
It built its stake in the fiercely competitive fuel industry by sticking to a low-cost strategy, which in New Zealand has seen it rolling out unmanned petrol stations, helping it carve out a handy 5% share of the market from the majors.
Gull New Zealand is an independent fuel importer and distributor, which brings with it a fuel import terminal at Mount Maunganui, on the north island, and the company’s petrol stations and retail outlets.
Caltex has established a large fuel import centre at the recently closed Kurnell refinery site in Sydney, while also establishing a buying and trading arm in Singapore to supply its Australian operations.
The New Zealand acquisition “optimises Caltex’s infrastructure position, builds trading and shipping capability, grows the supply base and enhances Caltex’s retail fuel offering through low-risk entry into a new market”, the company said in a statement on Thursday.
It was acquiring the company on a multiple of 8.2 times the forecast earnings before interest, depreciation and amortisation for 2017, it said, which will decline to around 7.5 times taking annualised synergies into account. The acquisition is expected to increase earnings per share from the first full year of ownership.
Gull operates 77 retail sites in total, of which it controls 55 sites. Around a third of those are unmanned. It also operates a further 22 supply sites. The company sells about 300 million litres of transport fuel annually.
The Mount Maunganui terminal is the largest facility of its type in New Zealand, with total storage of about 90 million litres. Its retail network is concentrated in the northern half of the north island of New Zealand, and “is well placed to profitably grow via new to industry and/or new supply site expansions”, Caltex said.
Caltex would retain Gull’s brand, management and employees, it said.
Gull has a reputation for being a low-priced market competitor by operating a large number of unmanned outlets with payment by Eftpos or credit card, with no retail outlet. Its outlets are concentrated near its import terminal, with negotiations in the past with rival importers to acquire competitively priced wholesale product blocked when it has sought to expand onto New Zealand’s south island.
The bulk of the country’s population is located on the north island, with Christchurch the largest city on the south island.
The purchase by Caltex follows a period of upheaval in the New Zealand market following the exodus of US group Chevron, which operated the Caltex brand in New Zealand. This was bought for $NZ785 million ($750 million) by Z Energy, which now has close to 50 per cent of the local market.
Ratings agency Standard and Poors said the purchase “will enhance Caltex’s regional supply base, adding scale to its trading and shipping activities”.
“We view New Zealand as being a low risk market for expansion of retail fuel assets,” it said.