Caltex Australia fields suitors, appoints temporary CEO
MELBOURNE/BENGALURU- Takeover target Caltex Australia said it was talking to other suitors and named a stand-in chief executive on Tuesday, as it tries to wring best value from rival bidders Canada’s Alimentation Couche-Tard Inc and Britain’s EG Group.
The supplier of a quarter of Australia’s fuel suspended its search for a new boss and tapped Chief Financial Officer Matthew Halliday to lead it for now as it evaluates the two takeover proposals, talks with others, and looks to boost returns from its refining and marketing businesses.
Halliday temporarily replaces Julian Segal, who flagged his retirement last August after more than 10 years at the helm.
The change had set the company up “to be able to progress a transaction” with the best value for shareholders, Halliday told reporters on Tuesday, as the company announced its full-year earnings.
“The transaction could unfold in any number of ways. What is most important for us, though, is to ensure that we don’t lose our focus on running the business extremely well,” he said.
Caltex last week disclosed a A$3.9 billion-plus (£2 billion-plus) offer from British convenience store retailer EG Group just days after Couche-Tard sweetened its bid to A$8.8 billion to win access to Caltex’s books.
Caltex and EG Group have not provided a total value for EG’s offer, which includes shares in a new listed infrastructure and refinery company, and analysts say it is unclear whether it beats Couche-Tard’s.
“It’s a proposal that we need to take our time to evaluate,” Halliday said.
“We continue to engage with a range of other parties in relation to the situtation, so it remains a very active space,” he told reporters on an earnings call.
The takeover tussle comes as Caltex works to boost margins from its refining business and its fuel and convenience store businesses, while also planning a public listing of a property trust with around 250 of its petrol station sites.
Profit margins at its Lytton refinery are being squeezed as the oil industry battles the economic impacts of the coronavirus and a big shift to producing fuels to meet new sulphur emissions rules for ships, Halliday said.
At the same time, Caltex has suffered from weaker fuel demand and consumer spending in a slowing Australian economy.
Full-year net profit for 2019 on a “replacement cost” basis, which strips out the impact of changes in the value of oil inventory and foreign exchange, fell more than 38% to A$344 million ($228 million), just above the midpoint of its own forecast.
Caltex on Tuesday announced a dividend of 51 cents per share for the second half of fiscal 2019.
Shares of the company slipped 0.7% to A$34.23, while the broader market fell 1.2%, holding below the value of Couche-Tard’s offer of A$35.25 amid uncertainty on how the bids would play out.
(Content and photos syndicated via Reuters)