Ampol has announced the proposed acquisition of the 500-store EG petrol station network. The acquisition price of $1,050 million is at an EV/EBIT of 24.8x pre synergies, or 9.1x post synergies (pre AASB-16), which highlights the importance of the synergies in this deal. Given Ampol’s existing supply to EG and ability to accelerate the rollout of U-Go un-manned stations, the synergies look plausible. We lift our target price from $28.50 to $30.00 to reflect the EG deal noting that it could be 5%-6% EPS accretive by FY29e. The key unknown is ACCC approval.

Ampol’s 2Q25 trading update showed improving margin performance across the majority of its segments. Refinery margins in diesel have lifted globally and its convenience operations in Australia & NZ are seeing improving fuel margins. While conditions are good, the EBIT momentum is in line with our thinking.

We initiate coverage on Ampol at a time when convenience sites are executing well with upside from a better sales mix and more foodservice offerings. In the next two years the company should also experience a substantial lift in profitability in its fuels businesses as throughput recovers and capital projects are completed.

Coles has announced the sale of its Fuel & Convenience business to Viva Energy. The company emphasises its desire to focus on its “omni-channel” supermarkets and liquor businesses, as well as become Australia’s most “sustainable” supermarket. The deal is mildly EPS accretive and a decent price for Coles. On our estimates the sale price is 12x EV/EBIT (FY23e) and 0.6% EPS accretive in FY24e. We do see some downside risks over time as Coles may lose the grocery wholesaling business and the cost of fuel discounts may rise.