The protracted stalemate between Australian fuel bigwig Caltex and its Canadian suitor has finally been broken.
Street Talk can reveal a long-awaited management presentation by Caltex top brass to their counterparts at Alimentation Couche-Tard is set to take place Thursday in Sydney.
No doubt Couche-Tard’s executive team, led by managing director Brian Hannasch, has a few pert questions for Caltex now that the issues around the level of disclosure of non-public information have been resolved.
On the agenda…
Top of the agenda will be the implications of two surprise developments since the convenience retailer tabled an $8.6 billion cash offer in late November; Caltex’s plan to rebrand to the lesser-known Ampol brand which was phased out 20 years ago, and the separate but related move by United States powerhouse Chevron to re-enter the already highly competitive Australian fuel retailing market.
Under the pre-Christmas rebranding initiative announced by Caltex, the Australian fuels supplier only has two more years exclusive use of its name and three years before it must drop it altogether. This is because the powerful, well-resourced Chevron will likely reclaim the brand as it rebuilds its local petrol and diesel presence through its $425 million takeover of Puma Energy’s Australian network.
The forced rebranding means Caltex, the country’s largest fuel supplier, is reliant on building up familiarity with a name that most Australians under 50 are unlikely to be familiar with. It is expected to cost $165 million over three years, only slightly offset by savings of $18 million to $20 million a year on licence fees.
These two factors have placed doubt on whether Couche-Tard’s current $34.50 a share offer can be justified, never mind the higher offer that Caltex is angling for.
Not the only suitor on the dance-card
Still, Couche-Tard is no longer the only suitor on Caltex’s dance-card.
British petrol station group EG is just one of several groups now in talks with Caltex on a takeover or asset purchase, in parallel with negotiations with Couche-Tard, whose offer has been knocked back by its target’s Steven Gregg-led board.
Caltex said earlier this month that EG Group, which last year acquired the Woolworths petrol station network in Australia for $1.73 billion, was among “a number” of parties to approach it to express interest in its business since Couche-Tard’s offer was disclosed six weeks ago,
Interestingly, lender sources told this column that EG, advised by Jefferies Australia and law firm Allen & Overy, has been lining up a potential funding package for its move after getting close to a firm proposal before Christmas.
When EG Group tapped debt markets for its Woolworths petrol purchase, British bank Barclays was “left lead” manager, while Deutsche Bank and UBS were arrangers and lead managers.
At $35.61, Caltex’s share price is now comfortably above what was rejected as inadequate by the board, thanks to the confirmation last week of rival interest.
Still, Couche-Tard has shown it’s not afraid to walk away from a bid, having abandoned takeover offers in the past on price grounds.
Extracted from AFR