More foreign suitors emerge for fuel giant Caltex

Australian fuel retailer Caltex has received approaches from a “number of parties” interested in making a takeover offer for its assets, raising the chance of a bidding war for the $8 billion giant.

Caltex on Wednesday revealed an offer it had rejected from Canadian convenience store operator Alimentation Couche-Tard late last year prompted multiple rival approaches, including from UK-based EG Group.

Caltex Australia is in the crosshairs of large foreign suitors.
Caltex Australia is in the crosshairs of large foreign suitors.Credit:Sasha Woolley

“Caltex has not received any proposal to acquire Caltex subsequent to the proposals from Alimentation Couche-Tard,” the company said in a statement.

“There is no certainty that any binding proposal will be made by any of the parties who have expressed potential interest.”


EG Group, backed by TDR Capital, emerged as a potential bidder this week after Caltex rejected an unsolicited $34.50-a-share offer from Couche-Tard in December, saying the bid undervalued the company.

It comes as the fuel retailing sector has suffered from lower refiner margins and a difficult retail environment with subdued demand from customers such as agriculture, transport and construction. Caltex argues it was at a low point in its earnings and said its recently proposed initial public offering to offload a half-stake in its 250 service stations around Australia into a $1.1 billion listed property trust would unlock greater value for shareholders.

Caltex has offered Couche-Tard, which is French for ‘night owl’, access to non-public information to allow it to submit a revised takeover offer, but is yet to receive a further bid from the company which operates 16,000 convenience stores worldwide.

Caltex’s new suitor, EG Group, has engaged Jefferies Group as financial advisers.

EG Group declined to comment on Wednesday.

Last year, EG Group completed a $1.73 billion acquisition of supermarket group Woolworths petrol network of 540 sites in Australia. The potential takeover of Caltex, if EG Group decides to make an offer, could face regulatory hurdles due to the impact on competition of combining the Woolworths sites with more than 1900 Caltex sites, industry sources said.

The Australian Competition and Consumer Commission (ACCC) in 2017 blocked BP, an existing retailer in Australia, from acquiring the Woolworths network as a result of competition concerns.

But Citi analyst James Byrne said competition concerns from ACCC were “not necessarily a hurdle that can’t be overcome”.

“We think acquirers in this segment can on-sell sites to appease ACCC concerns,” he said.

Based on Citi’s valuation, Mr Byrne said Caltex needed to execute on all of its earnings initiatives in order to meet Couche-Tard’s offer of $34.50 a share. In order to be valued higher by either Couche-Tard or a rival bidder, Caltex would need to execute further initiatives such as releasing $830 million of franking credits to shareholders, he said.

“You’d need to see management being able to execute on more initiatives than what they have already guided to,” he said.

Caltex’s shares were up 0.83 per cent, or 29 cents, to $35.34 in early trade.

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