Canadian convenience store operator Alimentation Couche-Tard has made a $5.8bn bid to acquire Caltex Australia, one of the nation’s largest transport fuel providers and retailers.
Caltex said on Tuesday that its board of directors is considering the unsolicited offer, which would enable the company to pay a special dividend to shareholders.
But it noted discussions with Couche-Tard about the A$34.50 (US$23.40) per share offer are at a preliminary stage and there is no certainty they would result in a transaction.
The A$8.6bn bid follows an earlier approach by Couche-Tard to Caltex, which was made at an indicative price of A$32 per share and later rebuffed by the latter’s board as inadequate.
“The Caltex board is focused on maximising shareholder value and will carefully consider any proposal that is consistent with this objective,” Caltex said in a statement.
Caltex shares surged 12 per cent to A$33.49 in Australian trading on news of the bid.
“We believe this is a very compelling offer for Caltex shareholders,” said Brian Hannasch, Couche-Tard president and chief executive. “[The company] has been looking into the Asia-Pacific region for several years as a potential market.”
The bid by Couche-Tard comes as multinationals unleashed a US$70bn wave of takeovers in the US market on Monday, as recessionary fears fade and borrowing rates remain at historically low levels.
Couche-Tard has built a petrol and convenience stores empire across North America, Scandinavia, Ireland and the Baltic nations over recent years through a series of acquisitions.
It also has licensing agreements in place in the Middle East, Asia and parts of Africa that bring its total store network to 16,000 worldwide.
In 2015, Couche-Tard bought Topaz, then Ireland’s biggest convenience store and fuel retail operator, with 464 service stations and 2,000 employees for an undisclosed price. The previous year, the Canadian company bought local rival The Pantry for $1.7bn including debt, consolidating its position as one of the largest convenience retailers in North America.
Mr Hannasch said Couche-Tard “was a committed buyer of the entire Caltex business”. But Ben Wilson, analyst at Royal Bank of Canada, said the Canadian company might divest some or all of Caltex’s fuel and infrastructure business, which includes refineries, if it is successful.
He said the bid should not face major regulatory hurdles and would largely hinge on deal value. “We think that the bid price from [Couche-Tard] is in the ballpark although a small bump may be needed to push a deal over the line,” said Mr Wilson.
RBC said the bid price implied a multiple of 9.6 times enterprise value to earnings before interest, tax, depreciation and amortisation. The bank said it did not think there were sufficient growth opportunities in Australia to justify a bid above a multiple of 10 times EV/Ebitda.
The bid from Couche-Tard follows a plan announced on Monday by Caltex to undertake an initial public offering of up to a 49 per cent stake in 250 core convenience retail freehold sites.
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