Caltex confirms potential takeover interest from ‘a number of parties’

Caltex is being targeted by a number of potential bidders.

Caltex has confirmed a number of approaches from potential takeover bidders which may challenge Alimentation Couche-Tard’s $8.6bn offer.

The approaches raise the potential of a bidding war for Caltex, as petrol stations and fuel networks look set to maintain their status as the hottest properties in Australian retail in 2020.

Responding to media speculation, Caltex told the ASX it had received an approach from the UK-based EG Group.

But it also said it has had approaches from “a number of parties...who have indicated that they are potentially interested in making a proposal to acquire Caltex or some of its assets”.

But Caltex said it hadn’t received a formal takeover proposal from any party since Canada’s Alimentation Couche-Tard’s $34.50-per-share cash offer made in late November.

It added: “There is no certainty that any binding proposal will be made by any of the parties who have expressed potential interest.”

Like Couche-Tard, EG Group would likely need Foreign Investment Review Board approval to close the deal.

The potential emergence of a new bidder sent Caltex shares up 69c, or 2 per cent, to close at $35.05 on Tuesday, comfortably above the $34.50 on offer from Couche-Tard, which initially offered $32 a share.

If an overbid emerges it would cement fuel networks and convenience stores, and the valuable real estate they occupy, as the hottest properties in Australian retail following a frenzy of deal-making in 2019.

EG Group paid $1.7bn for Woolworths’ network of 540 petrol stations and convenience stores in early 2019 to enter the local market.

Viva Energy, which operates the Shell brand in Australia, mopped up the wholesale arm of Liberty Oil in December, after the ACCC decided against intervening on competition grounds.

Caltex sold 25 high value mostly inner-city petrol stations as development properties for $136m to Woolworths and property developer Oliver Hume, and is mulling a spin-out of a half stake of another 250 service stations into a new listed property trust this year.

Charter Hall snapped up 49 per cent of 225 BP fuel stores in an $840m sale and leaseback property deal.

And US oil and gas giant Chevron made a surprise re-entry into the space in December in a $425m deal to take over Puma Energy’s commercial and retail fuels business, including its network of 360 petrol stations.

It is that last transaction that has thrown doubt over Caltex Australia’s outlook, given Chevron wants its Caltex brand back for Australian use, forcing Caltex Australia to return the venerable Ampol fuel station brand onto Australian streets over the next few years.

That transition, almost certainly to be followed by Chevron’s resumption of the Caltex brand for its new Puma outlets, will cost Caltex Australia about $165m, although it will save $18m to $20m in licensing fees after the changeover.

It has already raised questions over Caltex’s contention that Couche-Tard’s bid undervalues its stock given that, although the Ampol name still undoubtedly has strong recognition among older Australians, it has been absent from the market for about 20 years.

S&P Global Ratings already has Caltex Australia on a negative outlook over weak market conditions, and S&P noted the loss of the Caltex brand would likely intensify competition in the fuel and convenience store sector, saying Caltex risked losing market position if the changeover went awry.