Analyst notes on Tuesday suggested skepticism that the current offer, valuing Z Energy at a little under $2 billion, would be enough to win shareholder support.
"On the face of it Ampol's $3.78 bid for Z Energy appears reasonable, in our view a higher price will be required to secure a deal," Forsyth Barr analysts Andrew Harvey-Green and Mark Robertson wrote in a note to clients.
Z Energy's decision to open its books to the Sydney-headquartered company for four weeks "is designed to entice a more attractive bid from [Ampol], flush out other possible suitors and enable it to talk to shareholders".
Forsyth Barr raised its target price on Z Energy shares to $3.60, from $3.25 before the offer was made public. The price "reflects a 50 per cent chance a deal is done at NZ$4.00".
Jarden, meanwhile, raised its target price to $3.76, from $3.65 before the bid, above what its analysts valued the Ampol bid was worth to investors today.
Grant Swanepoel, Jarden's director of equity research, said while the offer was pitched at $3.78 a share, it needed to be adjusted for the time it could take to get Commerce Commission and Overseas Investment Office approvals.
Investors would only get a dividend if the deal isn't concluded before March 31, 2022, and then, if after that date, only to a maximum [10 cents per share]," Swanepoel said.
"So, if the deal is agreed at NZ$3.78 and takes seven months to conclude, we estimate investors would lose seven months of equity return," Swanepoel, which valued at 7.95 per cent, gave a spot value of $3.61.
Jarden appeared to believe that the sale of Gull, which has around a 17 per cent share of retail fuels in the North Island, should be enough to get Commerce Commission clearance.
"With no seeming change in industry structure, this divestment should help pave the way for ComCom approval," the Jarden note said, while the OIO was likely to view overseas owners of Z Energy the same way as BP and Mobil "who have global owners and own similar assets in NZ".
Using a discounted cashflow valuation and assuming that Z Energy was successful with the plans it outlined at its investor day in July, that could imply a value of $4 a share, Jarden wrote, although its assumptions for earnings before interest, tax, depreciation and amortisation in 2024 are about $30m below Z Energy's targets.
"Also, management intends to add shareholder value through a sale and leaseback of 53 of its freehold sites, generating $300m of cash while incurring just [around] $20m of extra lease costs," Swanepoel wrote.
Mark Samter, energy analyst at MST Marquee wrote that with the conversion of the Marsden Point fuel refinery to an import terminal meant the New Zealand market was "short" of refined fuels, meaning all product would have to be refined.
As a result Z Energy "is worth profoundly more to someone who creates value from the short than Z could create themselves", meaning a buyer which had its own refining capacity.
"My guess is that the synergies they get from owning that short would be worth [around] $70m per annum (maybe more)," Samter said.
"At NZ$3.78 a share, I think Ampol are probably getting a slightly better deal than Z shareholders are – but then Z shareholders collectively only have themselves to blame for where the share price is trading."
Samter said there was "a very long list of potential bidders for it" so it was possible another buyer could emerge.
"That list could include any of Chevron, Vitol, Glencore, Trafigura," or others.
On Monday shares in Z Energy jumped 14 per cent to $3.48, but on Tuesday the shares were lower throughout the session, down 3c at $3.45 at 3pm.
