May 31, 2020

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Canada’s Alimentation Couche-Tard ups bid for Caltex Australia
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Photo courtesy of Couche Tard

Canada’s Alimentation Couche-Tard Inc. (ACT) has upped its bid for 100% of Caltex Australia Limited to AUD34 (USD23.05) per share, less any dividends declared by Caltex, after Caltex rejected an earlier offer of AUD32 (USD21.69) per share on 11 October. ACT’s revised proposal reflects an enterprise value for Caltex Australia of approximately AUD10 billion (USD6.78 billion).

At the time of the revised proposal on 18 November, ACT held approximately 2.0% of Caltex Australia’s outstanding shares, which it continues to hold.

Goldman Sachs is acting as financial adviser and Allens is acting as legal adviser to ACT, a global leader in the convenience and road transportation fuel retail sector with more than 16,000 global sites across 26 countries and regions.

In 2017, ACT made a commitment to grow its Asia-Pacific presence through investments in or ownership of fuel and convenience assets.

“We believe this is a very compelling offer for Caltex shareholders, representing an excellent premium and certainty of value today. ACT’s management team has been looking into the Asia-Pacific region for several years as a potential market for our continued growth and we see many opportunities. With Caltex, we see a potential opportunity to leverage our leading global position in the convenience retail market, and we would seek to bring all our operating expertise to bear to help support and grow the Caltex business,” said Brian Hannasch, president and CEO of ACT.

The proposal is subject to a number of conditions, including due diligence, organising necessary financing for the transaction, no material asset sales, divestments or similar transactions, obtaining Foreign Investment Review Board approval, a unanimous recommendation by the Caltex board and the approval of the ACT board.

Caltex said its board is currently considering the ACT proposal, including obtaining advice from its financial advisers, UBS and Grant Samuel, and legal adviser, Herbert Smith Freehills.

The announcement follows Caltex’s announcement on 25 November to undertake an initial public offering (IPO) of up to a 49% interest in 250-core convenience retail freehold sites. The announcement of Caltex’s intention to undertake an IPO follows significant work Caltex has undertaken over the last 18 months to release value to its shareholders from its property portfolio and builds upon the network review announced in August. The company’s announcement about the IPO is not related to the proposal, the company said.

Caltex operates Australia’s third-largest refinery at Lytton in Brisbane which produces around 6.5 billion litres of fuel a year — or around 25% of Australia’s refining capacity and 10% of the country’s total fuel consumption.

The discussions between Caltex and ACT are at a preliminary stage, the proposal is highly conditional and there is no certainty that these discussions will result in a transaction, Caltex said.

“The Caltex board is focused on maximising shareholder value and will carefully consider any proposal that is consistent with this objective,” the company said in a statement.

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