Caltex Australia angling for higher bid from Couche-Tard

Although it rejected Alimentation Couche-Tard’s enhanced offer of approximately $5.91 billion (CA$7.8 billion), Caltex nevertheless believes that the convenience store and service station operator is a “serious” and “trustworthy” contender.

For this reason, the Australian company decided to offer the Quebec multinational the opportunity to have access to nonpublic information so that it could make a higher bid.

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“We received feedback from shareholders and thought it was important to take a constructive approach,” explained Caltex Chief Financial Officer Matthew Halliday on Thursday, December 5, at a conference for investors and analysts.

However, the company has not received a response from Couche-Tard since the announcement of the offer rejection. If the transaction were to proceed, it would become the largest acquisition of the Quebec giant.

On Tuesday, December 3, Couche-Tard had indicated by email that they had “nothing to add on the subject at this time.” At midday on Thursday, December 5, the company did not answer the questions sent by The Canadian Press.

The Quebec giant, which wants to double its size within five years, made an initial offer of $21.89 (A$32) for each Caltex share last October, but it was rejected because its price was deemed inadequate. The latter had come back to the table by proposing $23.60 (A$34.50) for each share of Caltex, which operates a network of some 2000 service stations, in addition to owning a refinery and fuel distribution and transportation assets.

Caltex management briefly commented on Couche-Tard’s offensive, noting that profits are expected to decline this year, in addition to announcing the sale of 25 sites that sell fuel. It also had to defend its decision to allow the Laval company to have access to inside information – in exchange for a confidentiality agreement – when there is no firm offer on the table.

“It’s not to do a pre-check,” said Mr. Halliday. It’s more to offer a way to come back with a proposal that could generate more value for our shareholders.” At a price of $23.60 (A$34.50) per share, Couche-Tard’s proposal represents a premium of approximately 16% over the closing price of Caltex’s stock on November 25, prior to the announcement of the receipt of an offer to purchase.

Caltex has nearly 6630 employees. On the Sydney Stock Exchange on Thursday, December 5, it was trading on stock at $23.52 (A$34.38), slightly below the $23.60 (A$34.50) price proposed by Couche-Tard in its enhanced proposal.

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