Caltex takeover battle heats up as new suitor looms

The takeover battle for Caltex has gained fresh momentum, with Macquarie joining the UK’s EG Group to consider a bid to trump Couche-Tard’s $8.6bn offer.

Caltex Australia controls about 34 per cent of the wholesale fuel market

The takeover battle for fuels retailer Caltex has gained fresh momentum, with investment giant Macquarie joining the UK’s EG Group to consider a potential bid to trump Couche-Tard’s $8.6bn offer.

Macquarie and EG have teamed up for early stage talks with Caltex over a possible buyout deal, sources said.

That could pave the way for a takeover tussle with one of the world’s biggest convenience players, which has already seen two of its offers for the Sydney-based company rejected.

A deal would see EG acquire Caltex’s main retail business with Macquarie taking on the refinery and infrastructure assets, according to Bloomberg.

Couche-Tard had previously considered forming its own consortium including IFM Investors and Trafigura, indicating the lead suitors are likely to split up Caltex should they ultimately prevail with offers. Neither Couche-Tard nor EG control any refining assets as part of their own portfolios.

Caltex on January 8 flagged a potential break-up of its wholesale and retail fuel arms, confirming it has fielded multiple approaches for all or some of its assets, including one from EG Group.

Canada’s Couche-Tard is progressing with its due diligence on Caltex, after receiving access to select non-public information, despite the board failing to support its $34.50-per-share bid for the company that put its value at $8.6bn.

US energy major Chevron is also being closely watched after it paid $425m in December to scoop up Puma Energy — Australia’s largest independent fuel retailer — just four years after selling its stake in Caltex.

EG has grown rapidly in Europe, the US and Australia, building a network of about 5000 fuel stations and convenience stores in a series of debt-fuelled acquisitions capped by last year’s $1.7bn deal for Woolworths’ network of 540 petrol stations.

It has debts of about £7.3bn ($14bn), according to Bloomberg, levels that may constrain a serious offer for Caltex.

Still, EG may face greater risks in getting a deal over the line, JP Morgan said, with potential competition concerns seen as a significant hurdle.

EG is already in talks with the Australian Competition & Consumer Commission to pave the way for a potential transaction.

One option could be to replicate the 2003 Shell Coles alliance, where Coles ran the retail operations while Shell supplied fuel and owned the sites, the broker noted.

The potential bidding war for Caltex is the latest in a flurry of deal-making in the fuel station and convenience store space. It includes EG’s acquisition of Woolworths, Viva’s move on Liberty, Caltex’s sale of 25 of its own sites as development properties, and Charter Hall’s $840m sale and leaseback deal over 49 per cent of 225 BP fuel stores.

As it offers Couche-Tard a limited look at its books, Caltex is also considering spinning out the property underlying its own network into a listed trust.

Caltex shares rose 0.34 per cent or 11c on Wednesday, to $32.93.

The stock has risen around 50 per cent since its lows in August last year.

Caltex Australia controls about 34 per cent of Australia’s wholesale fuel market, along with 25 per cent of the country’s fuel refining capacity and up to 17 per cent of retail fuel sales.