Caltex Australia elicits higher bid by working with Canadian suitor
MELBOURNE- Caltex Australia’s top executives disclosed on Thursday their plan of coordinating with a Canadian suitor in high hopes of acquiring larger takeover offer. Such followed after the petrol pump and convenience store operator rejected suitor’s A$8.61 billion offer.
Caltex Australia dismissed a takeover proposal by Canadian convenience store operator Alimentation Couche-Tard Inc as it was deemed inadequate. However, the Australian company offered to provide a non-public information access to the suitor in order to come up with a higher bid.
Matt Haliday, Caltex Australia’s Chief Financial Officer said that Couche-Tard is a “very serious and credible” bidder.
“We think the right approach is to be constructive to try and help them to come back with a compelling offer,” Haliday told analysts. The Chief Financial Officer also said that they are still waiting for the company’s response to their non-public information access offer.
The comments were made after Caltex disclosed that earnings will fall this year and said it had sold 25 fuel sites to release a capital while focusing on cheap bond markets to acquire A$300 million to A$500 million.
The company executives are firm with the board’s decision of giving the Canadian suitor a limited access to books if not given a considerable offer. They also defended the move by comparing the 16% premium from the Canadian firm as Caltex’s shares were stagnant in one-year and three-year troughs.
“The share price recently has been pretty much at a low point,…reflecting more soft trading conditions as the economy is a bit softer. But clearly in our view this is something that is not going to continue forever,” Chief Executive Julian Segal told reporters.
Couche-Tard still has to release a statement on Caltex’s announcement on Thursday. In line, Caltex’s shares underperformed as it traded under the dismissed bid price of A$34.50.
Caltex is in immediate call to turn around its business as weak consumer demand and margin continue to drag the company. The firm released its initial public offering prospectus with 49% offer from its 250 convenience retail sites to release capital. In line, Couche-Tard said it has the potential to get cancelled once it went ahead with an offer.
Net profit on a “replacement cost” basis for 2019 will range from A$320 million to A$360 million, the company warned on Thursday. Moreover, the company is looking forward on overseas expansion with existing businesses in New Zealand and the Philippines.