Caltex Australia shares fell more than 2% on Monday on news that the company had rejected one of its suitors, while at the same time encouraging it to remain in discussions.
The shares ended a volatile day’s trading on wider markets down 2.14% at $32, which is well below the $34 -$35 plus range where most of the takeover talk has been centred on from EG Group Canadian and convenience store operator, Couche-Tard.
Caltex said the offer from EG Group undervalues the company and does not represent compelling value for shareholders.
EG Group has offered $3.9 billion in cash for Caltex’s convenience stores and separate shares in a new listed refinery and infrastructure company housing Caltex’s remaining assets such as pipelines and distribution arms.
In a statement, the Caltex board said it took advice from financial and legal advisers and considered feedback from shareholders.
Despite its decision, the board said it was in shareholders’ interest to continue discussions with EG and has offered to do so.
Privately-owned EG Group entered Australia in 2018 with the acquisition of Woolworths’ petrol stations for $1.7 billion. Buying the Caltex sites might pose competition concerns as the BP offer for Woolies sites did (and led to that deal being abandoned).
Caltex was put in play by an approach from Couche-Tard, which in February offered $8.8 billion in cash.
Couche-Tard has since lifted the offer by 2% to 35.25, which is way above yesterday’s closing price.
Caltex is considering that but you have to wonder if the plunge in markets in the past week or so, the rise in volatility and the plunge in bond yields (signifying a desire for safety and not high debt deals) means all takeovers offering lots of cash and debt are dead for the time being.
