Couche-Tard Halts Caltex Aussie Bid

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Couche-Tard Halts Caltex Aussie Bid

Alimentation Couche-Tard Inc. has put on hold plans for a revised proposal to acquire Caltex Australia, citing economic impacts and uncertainty brought about by the Covid-19 pandemic.

Canadian convenience store operator Alimentation Couche-Tard made a takeover offer for Caltex Australia, one of Australia’s biggest lubricant and grease suppliers, in November. Though the A$8.6 billion (U.S. $5.8 billion) offer was for the entirety of the supplier, Couche-Tard – which doesn’t operate any lube blending facilities – could sell Caltex Australia’s lubes and grease segment. On Dec. 3, Caltex announced it had rejected the most recent proposal for undervaluing the company, but that it would provide Couche-Tard with non-public information to allow the Canadian company to submit yet another bid.

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“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,” Couche-Tard said in its news release on Sunday.

Couche-Tard President and CEO Brian Hannasch asserted in the news release that the company remained convinced of the long-term financial and strategic merits of an acquisition of Caltex Australia and all the benefits it would offer to the shareholders of both companies. “Despite the Covid-19 situation, we have worked to complete due diligence on schedule through a significant investment of time and money,” Hannasch 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.” He said Couche-Tard has been in regular discussion with its banking partners, and they “remain prepared to move forward in support of a transaction.”

Caltex is the brand name and the licensee for Chevron products in Australia, including refined fuels and lubricants. Chevron sold its 50 percent stake in Caltex Australia in 2015.

Shortly afterwards, Caltex broke up with BP Australia, dissolving a 15-year lubricant blending joint venture known as Australian Lubricant Manufacturing Co., which held around half of Australia’s lubricant and grease market and was valued at nearly A$2 billion.

After the split, Caltex retained a blending plant and base oil storage facility at Lytton in Brisbane as its home base for lubricants and grease in Australia. It also has distribution and warehousing facilities throughout the country in Sydney, Melbourne and Perth.

Caltex owns more than 250 fuel and retail outlets in Australia, while Couche-Tard operates around 16,000 retail stores globally and has been expanding its convenience store network into the United States, Europe and Asia.

Caltex Australia will rebrand its operations after Chevron notified the company in late December that it cannot use the Caltex brand on its lubricants and grease products once an existing licensing agreement between the two companies ends.

Caltex Australia said it will change its company name to Ampol, subject to a shareholder vote in May 2020. It will also rebrand its 2,000-plus service station chain and oil products to Ampol, a brand it has owned since the two companies merged in 1995.

Caltex’s license agreement provides a three-year transition period consisting of a six-month notice period and 30-month work-out period, Caltex Australia said in a statement released in late December. It wasn’t clear at that time if the Caltex brand would persist in the Australian marketplace. Chevron owns the Caltex brand name and uses it for lubes and grease products in some 60 countries, including China, India and the Philippines.

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Asia-Pacific    Australia    Business    Mergers & Acquisitions    Region