Australian refiners Ampol Ltd. and Caltex Australia have agreed to combine refining/marketing operations to create a 50-50 venture that will be the biggest in the country's downstream sector.
The new, currently unnamed entity will have total assets of $3 billion (Australian), revenues of $5.9 billion/year, and a market share of Australian retail petroleum sales of about 30%.
It will displace Shell Australia Ltd., with a 27% market share, from the top spot (OGJ, Dec. 12, 1994, p. 27) and leap well ahead of the other two main players in Australia's downstream sector, Mobil Oil Australia 21% and BP Australia 20%.
Industry observes see the pending merger as the final stage of rationalization in Australia's long-suffering refining/marketing sector, plagued by consolidation and poor margins for years.
WHAT'S INVOLVED
About 700 jobs are expected to be lost in the merger, along with the closure of 50 service stations, seven terminals, and 80 storage depots. However, the new company will retain the 74,000 b/d Ampol refinery at Brisbane and 107,000 b/d Caltex refinery at Sydeny, as well as 18 terminals, 280 depots, and 1,419 service stations across the country. Staff is expected to stabilize at about 2,100.
Sites will be rebranded with the new Ampol logo because it is identified in the public eye with Australian ownership. The Caltex brand will disappear in Australia.
The new company will have equal board representation from both companies. Ian Blackburn, current managing director of Ampol, will be chief executive, and Caltex Australia Chairman Barry Murphy is likely to become chairman.
The new vehicle at first will be funded by Caltex and Ampol parent Pioneer International before financing in 12 months, when both companies are to emerge from the deal with virtually no debt.
The transaction must be approved by shareholders of both companies and by the Australian Foreign Investment Review Board, the latter because Caltex is 75% U.S. owned, as well as by Australia's Trades Practices Commission.
RATIONALIZATION
The merger is seen as the final stage of rationalization in Australia's downstream petroleum segment, which began in 1981 when Caltex bought the local Golden Fleece brand.
In 1982, Ampol bought Total's Australian downstream operations, and in 1984 BP acquired Amoco Corp.'s Australian downstream operations.
In 1990, Ampol acquired the local Solo brand assets, and Mobil later acquired the Australian down-stream assets of Exxon Corp.
The nearest rival to the four remaining major downstream players in Australia is Burmah Castrol plc, a U.K. firm that reemereged in Australia during the 1980s and is making inroads into the Melbourne and Sydney retail petroleum scene.
Burmah has no refinery in the country, only a supply agreement with Shell.
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