Canadian store chain eyes Asia, sweetens Caltex bid
Convenience store operator Alimentation Couche-tard Inc sweetened an approach for Caltex Australia with a A$8.61 billion (US$5.8 billion) offer, a day after Caltex said it could carve out some of its convenience shop sites.
Caltex said on Tuesday that Couche-tard made an indicative A$34.50 a share offer, a nearly 16-per-cent premium to the petrol pump and convenience store operator’s last closing price, and seven-per-cent higher than the A$32 per share offer it previously received from the Canadian firm.
Australian (convenience store) networks are compelling.
The previous offer had not been disclosed before Tuesday and Caltex called it “inadequate.”
It said discussions with Couchetard were at an early stage, and the proposal was conditional with no certainty that it would result in a deal.
Couche-tard is willing to engage with Caltex to get a proposal to shareholders soon, its CEO, Brian Hannasch, said in a statement.
If the deal goes ahead, it would mark Couche-tard’s first foray into Australia, and its largest deal, according to Refinitiv data.
The Canadian company said it has been looking at Asia for several years.
Caltex is under pressure to turn around its business due to weak consumer demand and margin pressure from higher oil prices and has been reviewing its retail sites.
The new offer allows Caltex to pay a special dividend of up to A$8.41 a share but restricts it from selling assets, potentially hampering its plans for an initial public offering of up to 49 per cent of its 250 convenience retail sites that it announced on Monday.
Hannasch said Couche-tard was a “committed buyer of the entire Caltex business.”
Caltex shares jumped 13.4 per cent to close at their highest level in 15 months to A$33.79, but remained below the proposed price. Couchetard rose as much as 2.2 per cent to the highest in four months.
Terry Couper, an analyst at Airlie Funds Management, Caltex’s third-largest shareholder, said the new offer undervalued Caltex’s retail property and the “privileged position” of its fuel assets.
Analysts said they don’t expect Couche-tard to be interested in the fuel and infrastructure division.
RBC analyst Irene Nattel said the potential acquisition of Caltex would be consistent with Couchetard’s five-year plan to double its size through strong organic performance and acquisitions.
“Based on conversations with management, Australian c-store networks are compelling due to a well-developed fuels industry, while generally undermanaged inside store operations provide meaningful opportunity to surface incremental value,” she said. Reuters