Takeover target Caltex Australia has advised it has signed a confidentiality agreement, as expected, with its Alimentation Couche-Tard ahead of presentations by senior management later on Thursday that will provide its Canadian suitor with information on its business that isn’t available to the public.
The briefings by management, foreshadowed by The Australian Financial Review‘s Street Talk column, are intended to allow Couche-Tard to potentially firm up a higher offer than the $8.6 billion proposal that was rejected by Caltex’s board led by Steven Gregg.
At the same time, Caltex is exploring potential options with other suitors that are interested in parts of its business, which comprises Fuels & Infrastructure, including a refinery near Brisbane, and a convenience retailing network.
“There is no certainty that the discussions between Caltex and ATD [Couche-Tard] will result in ATD improving its indicative cash price or in ATD making a binding proposal,” Caltex said in a statement to the Australian Securities Exchange.
Shares in Caltex closed on Wednesday at $35.56 and have been trading comfortably ahead of Couche-Tard’s proposed $34.50 a share offer since the petrol and diesel supplier revealed rival interest.
But Couche-Tard president and chief executive Brian Hannasch, who is in Sydney for the briefings, reiterated on Thursday that the Canadian convenience retailer believes its existing proposal “fully values Caltex and is compelling for Caltex shareholders”.
He also highlighted Couche-Tard’s “disciplined” approach to the many acquisitions it has made in several markets.
“ACT is a disciplined investor and an experienced operator across multiple markets,” Mr Hannasch said in a separate statement.
“We have shown our capacity to successfully enter new markets, learn from our acquisitions and create value for our shareholders, but we will always be guided by shareholder returns in our decision-making.”
Caltex also confirmed a drop in its refining margin for the December quarter, underlining the soft market conditions for the business in the short term. Caltex’s refiner margin dropped to $US7.51 a barrel in the December quarter, down from $US10.53 a barrel in the July-September period and softer than in the same quarter a year earlier.
It confirmed its profit guidance range for the 2019 year given on December 5 but noted that earnings before interest and tax from the Lytton refiner would be slightly weaker than guided, at $70 million, rather than $75 million, reflecting softer refining conditions than it had assumed.
Extracted from AFR