CTX Caltex Australia Limited

By Robb M. Stewart

MELBOURNE, Australia -- Transport-fuel supplier Caltex Australia Ltd. (CTX.AU) has rejected a US$5.8 billion takeover approach from Alimentation Couche-Tard Inc. (ATD.A.T), but left the door open for the Canadian convenience-store operator to return with a raised bid.

In a statement Tuesday, Caltex said the offer from Couche-Tard undervalues the company and doesn't offer compelling value for its shareholders. However, it said its board has offered Couche-Tard selected non-public information to allow it to revise its proposal.

The offer, which values Caltex at 8.6 billion Australian dollars (US$5.83 billion), was unveiled late last month just a day after the Australian company said it planned to float an up to 49% stake in 250 of its core gas-station sites in Australia, which would release significant capital that adds to proceeds from 50 sites it is seeking to sell.

Couche-Tard in 2017 pledged to expand its fuel and convenience store operations in the Asia-Pacific region. On said Nov. 18 it made a confidential non-binding offer to the board of Caltex of A$34.50 a share, an increase on an offer of A$32 that was rejected a month earlier.

The fresh offer marked a 16% premium to the last closing price for Caltex's shares before the bid was made public, which Caltex said was too low.

It also said the offer price would be less than A$34.50, reduced by the value of the dividend it expects to pay for the second half of 2019 and that Couche-Tard has materially overestimated the potential cash benefit to most Caltex shareholders that could be expected from distributing unused franking credits, a benefit that company's can apply to dividend payouts that effectively prevents double-taxation for investors.

Caltex said the offer of non-public information to Couche-Tard was conditional on the companies signing a confidentiality agreements, and there was no certainty talks would result in a revised bid.

Caltex, which traces its roots to the listing of oil importer Ampol on the Australian Securities Exchange in the late 1940s, is a refiner, importer and supplier of fuels and lubricants with a network of about 1,800 company-owned or affiliated sites across Australia. In mid-August, Caltex said Managing Director and Chief Executive Julian Segal planned to step down after about a decade in the role once a new leader was selected.

Couche-Tard has almost 9,800 convenience stores throughout North America, including more than 8,500 selling motor fuel, and also has retail operations in Scandinavia, the Baltics, Ireland, Poland and Russia. It also has licensing agreements for about 2,250 stores operated under the Circle K brand in countries including Cambodia, China, Indonesia, Mongolia and New Zealand.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

December 02, 2019 18:11 ET (23:11 GMT)

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