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Couche-Tard abandons takeover bid for Caltex Australia

Couche-Tard abandons take over bid for Caltex Australia
Photo courtesy of Caltex Australia

Canada’s Alimentation Couche-Tard Inc. announced that it will abandon its takeover bid for Caltex Australia Ltd. due to the economic uncertainties created by the novel coronavirus pandemic.

Given that uncertainty and the impact it is having on our outlook for Caltex’s business, and consistent with Couche-Tard’s disciplined approach to acquisitions, the company is not in a position to make a revised proposal at this time, despite having secured the necessary financing commitments,” the company said in a statement issued yesterday.

Couche-Tard said the due diligence for the proposed transaction has been substantially completed, which confirms that Caltex Australia is a strong strategic fit for Couche-Tard and an important component of its Asia Pacific expansion strategy. 

“There are significant opportunities to be realized from combining both businesses and Couche-Tard remains highly interested in formalizing a transaction,” the company said.

Our current plan would be to re-engage the process once there is sufficient clarity as to the global outlook, and the work done to date should mean that we will be able to quickly formalize our proposal at that time,” said Brian Hannasch, president and chief executive officer of Couche-Tard.

In a separate statement, Caltex Australia said it remained well-positioned as an independent business, but would be willing to consider any future approach.

On 12th February, Alimentation Couche-Tard revised its offer to acquire all of the shares in Caltex Australia at an indicative cash price of AUD35.25 (USD22.41) per share less any dividends declared or paid by Caltex, following two earlier non-binding proposals in November 2019, placing the total value of the transaction at AUD8.8 billion (USD5.59 billion). Shares of Caltex Australia were trading at AUD21.91(USD13.93) today.

Couche-Tard is the leader in the Canadian convenience store industry. In the United States, it is the largest independent convenience store operator in terms of the number of company-operated stores. In Europe, Couche-Tard is a leader in convenience store and road transportation fuel retail in the Scandinavian countries (Norway, Sweden and Denmark), in the Baltic countries (Estonia, Latvia and Lithuania), as well as in Ireland, and has an important presence in Poland. 

Privately-owned UK convenience store retailer EG Group also made in February a rival offer of AUD3.9 billion (USD2.48 billion) in cash for Caltex Australia’s convenience stores plus shares in a spin-off company made up of its refining and fuel distribution assets.

EG Group was formed in 2016 when Euro Garages, run by Mohsin and Zuber Issa, merged with TDR’s European Forecourt Retail Group. The Issa brothers have built one of the world’s largest independent gas-station chains through a series of debt-fueled purchases. The company last year completed the AUSD1.73 billion (USD1.10 billion) purchase of 540 Australian fuel outlets from Woolworths Group Ltd. From a single gas station purchased in 2001, it is now a global giant with about 5,000 fuel stations and convenience stores across Europe, North America and Australia.