A serious health issue has forced Caltex Australia chairman Greig Gailey to step down after only 20 months in the role, to be replaced by former Goodman Fielder chairman Steven Gregg.

With the fuel supplier’s strategy firmly in place under chief executive Julian Segal, the unexpected change at the head of the board should not unsettle the market, investors signalled.

Caltex shares slipped 3¢ to $32.56.

Mr Gregg, an existing non-executive director of Caltex, is on the boards of Challenger and Tabcorp and is a senior adviser at Grant Samuel.

The transition comes as Caltex has embarked on a major revamp of its convenience retailing strategy as Mr Segal seeks to further grow the marketing side of the business after shrinking its refining activities. It has also been re-examining its franchise activities after allegations some operators were mistreating workers.

Vertium Asset Management chief investment officer Jason Teh said he didn’t anticipate any change in key strategies being pursued by Caltex such as mitigating risk in the fuel supply chain through the Singapore trading operations, and looking at returning capital to shareholders if the company’s strong balance sheet can’t be used for value-adding acquisitions.

“The change in chairman, I wouldn’t expect it to change the strategy at all as it’s being driven by the CEO,” said Mr Teh.

Seeking acquisitions

In its statement announcing the transition, Caltex, which has been seeking acquisitions to plug a potential $100 million-plus gap in its profits when a fuel supply contract with Woolworths comes to an end, highlighted Mr Gregg’s experience in corporate finance, strategy and M&A.

Caltex has been in talks with BP, which is expected to sell petrol stations to help win approval for its $1.8 billion takeover of Woolworths’ fuel retail network, the deal that has put at risk its own supply arrangements with the supermarket owner. Caltex had also bid for the Woolworths fuels business but lost out to its rival.

The past few months have seen Caltex complete two smaller acquisitions, the $325 million purchase of Gull New Zealand, its first overseas deal, and the $95 million purchase of Milemaker Petroleum in Victoria.

A director of Caltex since December 2007, Mr Gailey had a relatively brief stint as chairman, only taking over the role in December 2015. He was re-appointed at the annual meeting in May with 99.3 per cent shareholder support.

Mr Gailey, who has also resigned as a non-executive director, said it was “a great privilege” to have served on the Caltex board “and to have seen the company transform over the last decade into the successful business that is has today”.

Read more: http://www.afr.com/business/energy/oil/steven-gregg-to-take-over-as-caltex-chairman-as-greig-gailey-retires-20170820-gy0hvb#ixzz4qitim7SO