Caltex confirms approaches from more suitors
Written on the 8 January 2020 by Matt Ogg
Just a month after knocking back an $8.6 billion takeover offer from Canada's Alimentation Couche-Tard (ATD), Caltex Australia (ASX: CTX) has today confirmed approaches from a number of parties including the UK's EG Group.
The announcement follows a report from Bloomberg yesterday that EG was working with a financial adviser to evaluate a potential bid.
Founded by brothers Mohsin and Zuber Issa, EG Group made its foray into the Australian petrol retail market after buying 540 fuel convenience sites from Woolworths Group (ASX: WOW) for $1.73 billion.
If an offer is eventually made by the company it will likely draw the attention of the Australian Competition and Consumer Commission (ACCC).
In today's announcement, Caltex said parties had indicated they were "potentially interested in making a proposal to acquire Caltex or some of its assets".
"Caltex has not received any proposal to acquire Caltex subsequent to the proposals from ATD referred to in Caltex's previous announcement to the ASX on 26 November 2019," the company said,
"There is no certainty that any binding proposal will be made by any of the parties who have expressed potential interest."
ATD had offered to buy all Caltex shares at $34.50 each, but the board concluded the proposal undervalued the company given it was currently at a "low point" in its earnings, combined with consistent performance in the Fuels & Infrastructure business, significant opportunities for convenience retail and the strategic value of assets.
CTX shares were up 1.08 per cent trading at $35.43 each at 11:15 AEDT. Overall, the CTX share price is up 39 per cent over the past three months.
The Australian group, which in November proposed an initial public offering (IPO) for a convenience retail property trust, is also in the midst of a forced rebrand after Chevron Corporation gave a termination notice for using the Caltex brand in Australia.
After 18 months of discussions with Chevron about the future of the licence agreement, on 23 December Caltex announced it would proceed with existing plans to transition to the company-owned Ampol brand following a detailed brand strategy review.
Caltex's licence agreement provides a three-year transition period including a six-month notice period and 30-month work-out period, of which Caltex will have continued exclusive use of the brand for the first 18 months of that work-out timeframe.
"Ampol is an iconic brand in Australia and reflects our deep Australian heritage and expertise," Caltex managing director and CEO Julian Segal said at the time.
"Our market research confirms that Ampol continues to be regarded as a high-quality and trusted brand by Australian consumers and resonates across our key customer segments.
"The transition to Ampol also supports our evolution into a growing regional fuels and convenience business and will allow us to invest and build equity in a company-owned brand as we continue the rollout of our retail strategy. This includes capturing benefits from cost synergies of rebranding during the rollout."Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Author: Matt Ogg