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Alimentation Couche-Tard drops takeover pursuit of Australia-based Caltex

Unknown-1Alimentation Couche-Tard Inc. is hitting pause on its pursuit of Caltex Australia Ltd. due to uncertainty around the COVID-19 crisis.

Caltex is a transport fuel supplier with a network of approximately 2,000 company-owned or affiliated sites across Australia.

The Quebec-based company made its first move for Australia’s largest service station operator when it submitted an unsolicited A$32.00-per-share bid fin October. After Caltex rejected the first offer as inadequate, Couche-Tard came back in November with  a revised offer for A$34.50 .

On Dec. 3, Caltex rejected that offer when its board of directors concluded Couche-Tard’s proposal undervalued the company and wasn’t compelling for its shareholders. In turn, the board offered to release non-public information to allow Couche-Tard to formulate a revised proposal.

On Feb. 12 Couche-Tard reached out again, saying it would pay a cash price of A$35.25 per share, adding this represented the company’s best and final offer, in the absence of a competing proposal.

“We believe this further revised proposal takes into consideration the information provided throughout our engagement to date and represents a compelling premium for Caltex shareholders, as well as immediate certainty of value,” Brian Hannasch, president and CEO of Couche-Tard, said at the time.

During its earnings call mid-March, the company said it was still in pursuit of the deal.

Now Couche-Tard says given the uncertainty and the impact of the pandemic on its outlook for Caltex’s business, it is not in a position to make a revised proposal for the company.

However, it says it remains interested and plans to re-engage once there is more clarity in the global outlook.

In a release, Couche-Tard said its due diligence for a transaction has been substantially completed and that the work confirms that Caltex 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.”

Hannasch said: “We remain convinced of the long-term financial and strategic merits of an acquisition of Caltex 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. 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.”

Mr. Hannasch added: “Couche-Tard’s management team is grateful for the backing we received from all our stakeholders throughout this process. We want to thank our team members for their hard work during the due diligence and the people at Caltex for their focused effort made to address our questions. We have been impressed by their knowledge and dedication, especially during the challenging period through which we have all been operating. And finally, we want to thank our banking partners for their unwavering commitment, even in the face of increased market volatility due to the spread of COVID-19. We have been in regular discussion with them and they remain prepared to move forward in support of a transaction.”

 

 


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Couche-Tard CEO: We’re Still in Pursuit of Caltex Deal

Unknown-1Alimentation Couche-Tard Inc. continues to pursue an agreement to acquire Caltex Australia Ltd.

The Quebec-based company made its first move for Australia’s largest service station operator when it submitted an unsolicited A$32.00-per-share bid for Caltex in October. It followed that with a revised offer for A$34.50 in November after Caltex rejected the first offer as inadequate.

Caltex is a transport fuel supplier with a network of approximately 2,000 company-owned or affiliated sites across Australia.

Caltex’s board of directors also concluded that Couche-Tard’s second proposal undervalued the company and did not represent compelling value for Caltex’s shareholders. However, the board offered to provide Couche-Tard with selected non-public information to allow it to formulate a revised proposal.

As a result, Couche-Tard submitted a new offer to pay a cash price of A$35.25, or U.S. $23.73, per ordinary share. The retailer made the revised proposal on Feb. 12, as previously reported.

Five weeks later, that offer is still on the table.

“While it does not guarantee an agreement will be reached or transaction will be concluded, we are now actively engaged in due diligence to work with Caltex,” Couche-Tard President and CEO Brian Hannasch said during the company’s third-quarter fiscal year 2020 earnings call, held March 18.

“As we said before, Couche-Tard is focused on strategically developing our Asia Pacific presence to drive continued growth in that region in the future,” he added.

Laval-based Couche-Tard has nearly 15,000 sites across 26 countries and regions. Its global brand is Circle K.

Originally posted at Convenience Store News. 


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Couche Tard faces rival bidder for Caltex

Unknown-1Alimentation Couche-Tard Inc. is facing a rival bidder for Caltex Australia Ltd.

Australia’s largest retail fuel and convenience chain says EG Group Ltd. has made a takeover offer for the company.

Under the proposal, Caltex shareholders would receive roughly AU$15.62 in cash and a security in Ampol, which will own Caltex’s fuel and infrastructure business as well as its international trading and shipping operations.

Caltex says EG has also indicated that it is prepared to consider acquiring up to 10 per cent of Ampol for additional cash consideration.

The company, which operates approximately 2,000 service stations, says it’s considering the proposal, including obtaining advice from its financial and legal advisers.

Quebec-based Couche-Tard raised its offer for all of Caltex last week to AU$35.25 per share in cash less any dividends declared or paid.


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Couche-Tard eager to buy “the entire Caltex business”

Unknown-1Alimentation Couche-Tard confirms the announcement by Caltex Australia Limited that it has made a further revised non-binding, indicative offer to the Board of Caltex to acquire 100% of Caltex.

“We believe this further revised proposal takes into consideration the information provided throughout our engagement to date and represents a compelling premium for Caltex shareholders, as well as immediate certainty of value,” Brian Hannasch, president and CEO of Couche-Tard, said in a statement. “We have long viewed the Asia-Pacific region as strategic to Couche-Tard’s future growth, and we look forward to our continued engagement with the Caltex Board in progressing this further revised proposal. We remain a committed buyer of the entire Caltex business, where we see a potential opportunity to leverage our deep operating expertise and global insights to support and grow the Caltex business.”

The revised proposal was made on February 12, 2020 and follows two earlier non-binding proposals. Couche-Tard confirmed in a statement that the latest offer represents its “best and final offer price, in the absence of a competing proposal.”

The Australian company said last week the proposal would pay AU$35.25 cash per share less any dividends declared or paid by Caltex. According to Canadian Press, the revised proposal allows Caltex to pay a special dividend to shareholders.

Couche-Tard raised its offer for Caltex from AU$34.50 per share after the Australian firm said the $7.7-billion offer in December undervalued the company. It was also rebuffed in October when it made an offer of AU$32 per share.

Caltex operates approximately 2,000 service stations. Couche-Tard already owns about 2% of Caltex shares.

While there is no assurance that an agreement will be reached or that a transaction will be concluded, Couche-Tard outlined in a release that if it were to go forward, the transaction would remain subject to various conditions including:

  • Satisfactory completion of due diligence by Couche-Tard;
  • No material asset sales, divestments or acquisitions of assets, capital raisings, capital management initiatives or similar transactions by Caltex, including the planned property IPO;
  • Unanimous recommendation from Caltex’s Board, agreeing to a scheme implementation deed containing customary terms and conditions, and approval by Couche-Tard’s Board; and
  • Approval by Australia’s Foreign Investment Review Board.

Goldman Sachs is acting as financial adviser and Allens is acting as legal adviser to Couche-Tard in relation to the further revised proposal.


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Alimentation Couche-Tard ups offer for Australian convenience chain, says Caltex

UnknownCaltex Australia Ltd., Australia’s largest retail fuel and convenience chain, says it has received a revised takeover offer from Alimentation Couche-Tard Inc.

The Australian company says the proposal would pay AU$35.25 cash per share less any dividends declared or paid by Caltex. The revised proposal allows Caltex to pay a special dividend to shareholders.

The Australian retailer says the Quebec-based convenience store chain has indicated its revised price was its “best and final price in the absence of a competing proposal.’”

Couche-Tard raised its offer for Caltex from AU$34.50 per share after the AuUnknown-1stralian firm said the $7.7-billion offer in December undervalued the company. It was also rebuffed in October when it made a offer of AU$32 per share.

Caltex operates approximately 2,000 service stations.Couche-Tard already owns about 2% of Caltex shares.


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Couche-Tard aims to double its size

couche-tard2-780x520Alimentation Couche-Tard will continue to focus on growing its U.S. footprint despite proposing an acquisition in Australia it hopes will be a springboard for expansion in Asia Pacific, the convenience store operator’s CEO said.

Brian Hannasch told analysts last week that the company remains focused on consolidating the large American market despite seeking opportunities in a new global geography.

“Despite our size, it’s a massive market, a healthy economy, healthy consumers, and it’s probably the market where we can achieve the greatest synergies,” he said during a conference call.

Hannasch said Asia Pacific is where more of the GDP growth over the next two decades is going to come for.

“So really, for the last three or four years, we’ve looked pretty hard in that market. And you all saw the press release about our offer to Caltex in Australia, which we think is very consistent with the strategy.”

Australia and New Zealand are stable, promising markets that resemble North America and Europe, he said.

“We see Caltex as a potential springboard to expand our presence in Asia Pacific should the Caltex Board choose to engage with us on a proposal.”

The retailer was proposing the largest acquisition in the company’s history with a $7.7 billion bid for Australia’s largest retail fuel and convenience chain, which operates about 2,000 service stations. Couche-Tard had raised its offer for Caltex to AU$34.50 per share after being rebuffed in October when it made a offer of AU$32 per share.

In breaking news, Caltex this week rejected the latest takeover offer, however it is giving the Canadian company a chance to increase its bid.

The Australian company says the current proposal undervalues the company and “does not represent compelling value for Caltex’s shareholders.”

However, the Caltex board has offered Couche-Tard access to selected non-public information to allow the Canadian company to come up with a revised offer. Couche-Tard already owns about 2% of Caltex shares.

Purchasing Sydney-based Caltex Australia Ltd. would allow the Quebec-based retailer to expand beyond North America and Europe as it aims to double the company’s size.

Derek Dley of Canaccord Genuity said the Caltex acquisition is far from complete with talks in the preliminary phase. He believes Couche-Tard is interested in purchasing Caltex’s entire business, which includes a refinery and wholesale fuel division, along with the company’s retail network. But he foresees it selling the non-retail network over time as the proposal multiple is on the higher end of deals that include a refinery.

“Therefore, while we believe Couche-Tard has a solid track record as an acquiror, we are not quite convinced on the strategic rationale of purchasing the entire asset at a high single-digit multiple,” he wrote in a report.

Keith Howlett of Desjardins Capital Markets says the offer has likely come to light because Caltex recently announced that it was planning to spin off a 49% interest in 250 retail sites into a REIT. In addition, Caltex shares have performed poorly and the current CEO has announced his plan to retire.

Alimentation Couche-Tard said last week that its net income surged by 21.5% to US$579.4 million in its fiscal second quarter, up from US$477 million a year earlier.

Excluding one-time items, adjusted profits for the three months ended Oct. 13 were US$571 million or 51 cents per diluted share, compared with US$466 million or 41 cents per share in the year prior. The retailer benefited from a 27.7% boost in U.S. fuel margins even though fuel revenues dipped nearly eight%.

Revenues decreased to US$13.68 billion from US$14.7 billion in the second quarter of 2018 with merchandise revenues increasing 2.3% to US$3.5 billion and network fuel revenues decreasing 8.8% to US$9.9 billion.

Merchandise same-store sales grew 3.2% in the U.S., 2.1% in Canada and 3.3% in Europe.

Couche-Tard was expected to earn 48 cents per share in adjusted profits on US$14 million of revenues, according to financial markets data firm Refinitiv.

Its convenience store network includes nearly 9,800 stores throughout North America and 2,700 in Europe. It employs almost 133,000 people and has licensing agreements for about 2,250 stores operated under the Circle K banner in 16 other countries and territories.


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Caltex rejects Couche Tard takeover offer, opens door for revised bid

Unknown-1Caltex Australia Ltd., Australia’s largest retail fuel and convenience chain, is rejecting a $7.7-billion takeover offer from Alimentation Couche-Tard Inc., however it is giving the Canadian company a chance to increase its bid.

The Australian company says the current proposal undervalues the company and “does not represent compelling value for Caltex’s shareholders.”

However, the Caltex board has offered Couche-Tard access to selected non-public information to allow the Canadian company to come up with a revised offer.

Caltex operates approximately 2,000 service stations.

Couche-Tard raised its offer for Caltex to AU$34.50 per share last month after being rebuffed in October when it made a offer of AU$32 per share.

Couche-Tard already owns about 2% of Caltex shares.


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Couche Tard makes C$7.7B bid for Australia’s Caltex

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Alimentation Couche-Tard Inc. is proposing the largest acquisition in the company’s history with a $7.7 billion bid for Australia’s largest retail fuel and convenience chain.

The unsolicited purchase offer for Sydney-based Caltex Australia Ltd. –  its second this year – would allow the Quebec-based retailer to expand beyond North America and Europe as it aims to double the company’s size.

Couche-Tard CEO Brian Hannasch described the proposal as “a very compelling offer” for Caltex shareholders.

“Alimentation Couche-Tard’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,” he said in a news release.

“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.”

The proposal for AU$34.50 per share is for the redemption of all Caltex shares outstanding. Couche-Tard already owns about two per cent of Caltex shares.

This is an unsolicited, non-binding, conditional and confidential offer, Caltex said in a statement released Tuesday morning local time.

The proposal also includes the payment of certain dividends to shareholders at the time of the eventual takeover.

Caltex says Couche-Tard’s previous offer in October at AU$32 per share was rejected for being value too low.

The proposal includes no material asset sales or divestments and precludes Caltex’s planned property public offering.

Keith Howlett of Desjardins Capital Markets says the offer has likely come to light because Caltex recently announced that it was planning to spin off a 49% interest in 250 retail sites into a REIT. In addition, Caltex shares have performed poorly and the current CEO has announced his plan to retire.

“Given the complexity of the transaction, including the divestiture of non-retail assets, we conclude that Couche-Tard management foresees significant upside to the retail fuel and convenience business in Australia,” he said in a report.

The potential acquisition would be consistent with Couche-Tard’s five-year plan to double its size, added Irene Nattel of RBC Capital Markets.

“Based on conversations with management, Australian c-store networks are compelling due to a well-developed fuels industry, while generally undermanaged inside store operations provide meaningful opportunity to surface incremental value,” she wrote in a report.

Caltex operates approximately 2,000 service stations where it operates gasoline and retail sales.

The offer is subject to audit and approval, as well as a vote of the boards of directors of both companies involved.

Alimentation Couche-Tard said after markets closed on Tuesday that its net income surged by 21.5 per cent to US$579.4 million in its fiscal second quarter, up from US$477 million a year earlier.

Excluding one-time items, adjusted profits for the three months ended Oct. 13 were US$571 million or 51 cents per diluted share, compared with US$466 million or 41 cents per share in the prior year. The retailer benefited from a 27.7 per cent boost in U.S. fuel margins even though fuel revenues dipped nearly eight per cent.

Revenues decreased to US$13.68 billion from US$14.7 billion in the second quarter of 2018 with merchandise revenues increasing 2.3 per cent to US$3.5 billion and network fuel revenues decreasing 8.8 per cent to US$9.9 billion.

Merchandise same-store sales grew 3.2 per cent in the U.S., 2.1 per cent in Canada and 3.3 per cent in Europe.

Couche-Tard was expected to earn 48 cents per share in adjusted profits on US$14 million of revenues, according to financial markets data firm Refinitiv.

“We continue to experience steady results in our overall business with strong fuel performance and merchandise sales,” Hannasch stated in a news release.

“In the convenience sector, we are starting to see good traction from the different projects we launched, such as food pilots, our digital upsell platform, and the redesign of our European stores.

Couche-Tard’s convenience store network includes nearly 9,800 stores throughout North America and 2,700 in Europe. It employs almost 133,000 people and has licensing agreements for about 2,250 stores operated under the Circle K banner in 16 other countries and territories.