Sarah Thompson, Anthony Macdonaold & Jake Mitchell, 25 September 2015

Cashed-up Caltex is eyeing a number of acquisitions, but it’s hard to look much further than buying out its partner Woolworths from its petrol joint venture.

Only 1 per cent of Woolworths’ earnings before interest and tax comes from the fuel business, though it is used to drive sales in the grocery businesss.

If the petrol division was spun off or sold, Woolworths may be able to retain supermarket bundle agreements with the new owner.

As the supermarket chain under new chairman Gordon Cairns reviews its operations, it could be perfect timing to consider a deal with Caltex.

UBS analyst Cameron Hardie estimates Caltex has about $600 million up its sleeve to allocate to acquisitions and capital management initiatives while maintaining its BBB+ credit rating.

Other targets for Caltex chief executive Julian Segal include BP’s local retail business should the British major exit Australia, though the company isn’t in divestment mode.

Elsewhere, private Chinese group Landbridge (perhaps best known in Australia for last year’s $178 million takeover of Queensland coal-seam gas play WestSide Corp) has emerged as a bidder in the auction for the $300 million-plus Port of Darwin.

The sale of the port has been progressing slowly, but the Northern Territory government, which is being advised by Flagstaff Partners, is aiming to have the long-term lease signed and implemented by the end of the year.

Interestingly, sources suggested at least one of Flinders Ports’ backers may be weighing up a binding offer. The South Australian port dropped out of the auction last month as its shareholder group could not agree on price, but it’s believed Infrastructure Capital Group, and potentially Equipsuper, are back in the mix.

The other two bidders are Deutsche Asset Wealth Management and the JPMorgan-advised Port of Brisbane.


Extracted in full from the Australian Financial Review.