Executives from Caltex Australia suitor Alimentation Couche-Tard, the Canadian convenience store group, are expected to take their time weighing up whether to make another offer for the fuel retailer, after leaving Sydney over the weekend.

Canadian billionaire Alain Bouchard and Couche-Tard chief executive Brian Hannasch flew home to Canada on the weekend after meeting Caltex executives in recent days following an $8.6 billion indicative takeover bid, but are not expected to rush into any decisions.

Couche-Tard’s $34.50-a-share cash offer was rejected in November by Caltex’s board.

Caltex has entered into a confidentiality agreement with Couche-Tard, which owns 2 per cent of the Australian fuel retailer, to provide it with non-public information so the Canadian group can consider whether to revise its bid.

Couche-Tard has warned that there is no certainty that talks with Caltex will lead to it raising its cash price or making a binding offer.

“We continue to believe our proposal fully values Caltex and is compelling for Caltex shareholders,” Mr Hannasch said last week.

Couche-Tard made an initial proposal on October 11 to buy Caltex for $32 per share, including a fully-franked, special dividend. Caltex shares closed the previous day at $25.43 per share.

On November 18, Couche-Tard revised its proposal to $34.50 per share, including the special dividend.

Its proposal comes with specific conditions, including unanimous recommendation from Caltex’s board and no material asset sales, divestments or similar transactions including Caltex’s planned property float.

If the Caltex board does accept a revised offer from Couche-Tard, the ACCC has signalled it may not face heavy scrutiny, given the Canadian firm has no existing Australian presence, unlike some rival interested parties such as UK-based EG Group, which last year acquired Woolworths’ petrol network in Australia.

Caltex has not agreed to exclusive talks with Couche-Tard, which means it can continue to take offers from other suitors including EG Group, although EG is interested only in Caltex’s convenience retailing network and has not made any formal offers.

Ratings agency Standard & Poor’s said on Friday that Couche-Tard’s takeover proposal could weaken Caltex’s credit profile if a firm bid ultimately transpired. That reflects the weaker credit quality of Couche-Tard, which is rated BBB, relative to Caltex at BBB+.

“The credit impact will ultimately depend on [Couche-Tard’s] corporate and funding strategy, as well as our view of Caltex’s strategic importance as an operating subsidiary of the [Couche-Tard] group,” S&P said.

S&P has a negative outlook on Caltex’s rating in the expectation that the weak operating conditions affecting its retailing and refining earnings will persist for another 12-24 months.

“This will test the effectiveness of Caltex’s capital management framework,” it said.

Extracted from AFR