Ampol’s delay on Lytton Oil Refinery dampens Couche-Tard’s ardour

It has been no secret that buying Ampol without its refinery is a more attractive prospect for the Canadian suitor Couche-Tard. Picture: NCA NewsWire / Brenton Edwards

Australian petroleum company Ampol — formerly Caltex Australia — has delayed a decision about its Lytton Oil Refinery in Queensland, a move that may stave off a revised takeover bid by Canadian suitor Couche-Tard, according to market observers.

A review of the Lytton refinery was announced about a month ago and is due to be completed in the second half of 2021.

Earlier, the thinking was that an outcome was imminent, and if the company opted to shut down the refinery it could make another bid by Couche-Tard more attractive.

Now the review is taking longer than expected, prompting some to question the reason for the hold-up.

It has been no secret that buying Ampol without its refinery is a more attractive prospect for the Canadian suitor, which walked away from a $8.8bn offer in April due to the COVID-19 pandemic.

 

Two months ago, many in the market took the appointment of Ampol chief commercial officer Louise Warner as a clear signal that Couche-Tard had intentions to revive its pursuit of the Australian-listed petrol retailer. At the time, the group still had a stake in its target.

Some say that the deterrent was more the pandemic than the price.

However, Ampol shares are now close to $30 and climbing on the back of a share buyback announcement, which could mean that the target has got away from it for now.

Ampol has sold off some property to Charter Hall and GIC for $635m.

Couche-Tard last year made three bids for Ampol, two of which were rejected, but a third at $35.25 per share won the company the right to conduct due diligence.

As well as a $300m to $600m share buyback, Ampol also announced at its investor day it was tapping the bond market. It is believed to be asking fixed income investors to take up subordinated notes worth about $500m with a 60-year final maturity and a call period of every 5.25 years. Analysts suggest the raising is to repay an earlier hybrid debt instrument.

UBS is working on the raise as sole structuring adviser, along with Citi, CBA and NAB.