Bridget Carter & Gretchen Friemann

Caltex Australia is believed to be advancing plans for an acquisition in the retail space, with sources suggesting that the fuel producer is in talks with Woolworths about a deal to buy the grocer’s petrol stations.

It is likely that UBS is working for Caltex, which has had a major acquisition on its agenda for some time.

Caltex managing director Julian Segal has hinted that the Australian-listed group wants to capitalise on its expertise in the retail space via an acquisition.

The company’s strategy has been to move more from being an oil refiner to a distributor and provider of complete convenience services.

Woolworths boss Brad Banducci has stated the group’s intention to focus on food and liquor, although some market analysts argue that the petrol station business is an important complementary component to that offering, given the sites are close to Woolworths supermarkets.

Woolworths has 600 petrol outlets, co-branded Caltex Woolworths, where they are owned by Woolworths but Caltex supplies the fuel.

Caltex is understood to own a small number of petrol stations, which remain in partnership with Woolworths as the retail supplier.

A potential scenario is a deal whereby Woolworths is able to offload the stations but maintain its branding on the chain of service station outlets, which estimates suggest are worth about $1.5 billion.

BP has also scanned the business, but Caltex is known to have been eager to embark on an acquisition for some time, and it comes as Woolworths is mounting a structural review of its assets across the entire business.

DataRoom reported on Wednesday that Caltex Australia was also weighing a selldown or spinoff of its fuel storage assets. The oil refiner declined to comment.

Extracted in full from the Australian Business Review.