Sarah Thompson, Anthony Macdonald, Joyce Moullakis

There are easier ways to make a living than pitching acquisition targets to Caltex Australia.

While the $9 billion fuel supplier is cashed up, has clearly defined its refreshed strategy and now has shareholder blessing to acquire growth, convincing Caltex to part with its money and chase deals is not easy.

You only have to ask the bankers at UBS. Multiple sources have told Street Talk that UBS has had Caltex’s ear for much of the past year, helping them with the new “freedom of convenience” vision and five pillar focus to extend its business.

Some of the company’s larger investors are keen to see action. Otherwise, they want a larger slice of the $1 billion-odd franking balance.

So what are the options? In the spirit of convenience, fundies reckon there are two obvious places to start – buy alliance partner Woolworths out of some of its petrol business or look across the Tasman to Z Energy.

Buying some or all of the 513 convenience stores operated by Woolworths under the Caltex brand would see Caltex add the retail margin on fuel and convenience store items to the wholesale supply margin it already receives.

And with almost 4 billion litres of fuel sold through these stores each year, it’s sure to see some big numbers flowing through the company’s profit and loss statement.

The problem is that while there is plenty up for sale, petrol is not one of them. Although, the deal chasers reckon Citi-advised Woolworths could always be tempted by a big price.

The other is Kiwi company Z Energy, which is bedding down its acquisition of Chevron New Zealand’s service station network following a prolonged regulatory process.

While the Kiwi company’s shares have run hard over the past year, it would offer Caltex a pretty big – and quick – footprint into the country. And while Caltex may have bigger fish to fry than the New Zealand market, it’s yet to hook any.

Bankers are also scurrying around for other potential deals that could fit the convenience mantra. Caltex is well known to most of the big banks, and was particularly close to the company prior to Chevron’s stunning $4.7 billion exit last year. 

Extracted in full from the Australian Financial Review.