Couche-Tard look­ing to ac­quire large Aus­tralian chain

$7.7-bil­lion deal would get Quebec com­pany into Asia-Pa­cific re­gion

The Peterborough Examiner - - BUSINESS - ROSS MAROWITS

Ali­men­ta­tion Couche-Tard Inc. is propos­ing the largest ac­qui­si­tion in the com­pany’s history with a $7.7 bil­lion (Cana­dian) deal for Aus­tralia’s largest re­tail fuel and con­ve­nience chain.

The un­so­licited pur­chase of­fer for Syd­ney-based Cal­tex Aus­tralia Ltd. — its sec­ond this year — would al­low the Que­becbased re­tailer to ex­pand be­yond North Amer­ica and Europe as it aims to dou­ble the com­pany’s size.

Couche-Tard CEO Brian Han­nasch de­scribed the pro­posal as “a very com­pelling of­fer” for Cal­tex share­hold­ers.

“Ali­men­ta­tion Couche-Tard’ man­age­ment team has been look­ing into the Asia-Pa­cific re­gion for sev­eral years as a po­ten­tial mar­ket for our con­tin­ued growth and we see many op­por­tu­ni­ties,” he said in a news re­lease.

“With Cal­tex, we see a po­ten­tial op­por­tu­nity to lever­age our lead­ing global po­si­tion in the con­ve­nience re­tail mar­ket, and we would seek to bring all our op­er­at­ing ex­per­tise to bear to help sup­port and grow the Cal­tex busi­ness.”

The pro­posal for $34.50 (Aus­tralian) per share is for the re­demp­tion of all Cal­tex shares out­stand­ing.

Couche-Tard al­ready owns about two per cent of Cal­tex shares.

This is an un­so­licited, non­bind­ing, con­di­tional and con­fi­den­tial of­fer, Cal­tex said in a state­ment re­leased Tues­day morning lo­cal time.

The pro­posal also in­cludes the pay­ment of cer­tain div­i­dends to share­hold­ers at the time of the even­tual takeover.

Cal­tex says Couche-Tard’s pre­vi­ous of­fer in Oc­to­ber at $32 (Aus­tralian) per share was re­jected for be­ing value too low.

The pro­posal in­cludes no ma­te­rial as­set sales or di­vest­ments and pre­cludes Cal­tex’s planned prop­erty public of­fer­ing.

Keith Howlett of Des­jardins Cap­i­tal Mar­kets says the of­fer has likely come to light be­cause Cal­tex re­cently an­nounced that it was plan­ning to spin off a 49 per cent in­ter­est in 250 re­tail sites into a REIT.

In ad­di­tion, Cal­tex shares have per­formed poorly and the cur­rent CEO has an­nounced his plan to re­tire.

“Given the com­plex­ity of the trans­ac­tion, in­clud­ing the di­vesti­ture of non-re­tail as­sets, we con­clude that Couche-Tard man­age­ment fore­sees sig­nif­i­cant up­side to the re­tail fuel and con­ve­nience busi­ness in Aus­tralia,” he said in a re­port.

The po­ten­tial ac­qui­si­tion would be con­sis­tent with Couche-Tard’s five-year plan to dou­ble its size, added Irene Nat­tel of RBC Cap­i­tal Mar­kets.

“Based on con­ver­sa­tions with man­age­ment, Aus­tralian cstore net­works are com­pelling due to a well-de­vel­oped fuels in­dus­try, while gen­er­ally un­der­man­aged in­side store op­er­a­tions pro­vide mean­ing­ful op­por­tu­nity to sur­face in­cre­men­tal value,” she wrote in a re­port.

Cal­tex op­er­ates about 2,000 ser­vice sta­tions where it op­er­ates gaso­line and re­tail sales.

The of­fer is sub­ject to au­dit and ap­proval, as well as a vote of the boards of di­rec­tors of both com­pa­nies in­volved.

Couche-Tard’s con­ve­nience store net­work in­cludes nearly 9,800 stores through­out North Amer­ica and 2,700 in Europe.

It em­ploys al­most 133,000 peo­ple and has li­cens­ing agree­ments for about 2,250 stores op­er­ated un­der the Cir­cle K ban­ner in 16 other coun­tries and ter­ri­to­ries.

RYAN REMIORZ THE CANA­DIAN PRESS

Couche-Tard founder and chair Alain Bouchard has pro­posed a $7.7-bil­lion deal for Aus­tralia’s largest con­ve­nience chain.

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