Canada’s Couche-Tard tests bid partner appetite for Caltex: sources

Sarah Thompson, Anthony Macdonald and Tim Boyd

Nov 26, 2019

AFR

Acquisitive North American fuel and convenience store operator Alimentation Couche-Tard shapes as the most logical party to be circling Caltex Australia.

As Caltex shores up its takeover defences -and investors and analysts starting thinking about M&A scenarios – fingers are pointing at Couche-Tard as the logical place to start.

It is understood Couche-Tard wants Caltex’s shop fronts and convenience business – but is less keen on the Australian company’s refineries and other infrastructure assets.

Sources said Couche-Tard had been testing the market for bid partners, who could take the fuels and infrastructure business.

Infrastructure firm Morrison & Co, which has experience in the sector via Z Energy in New Zealand, is believed to be the type of bid partner on Couche-Tard’s hit list.

Interestingly, it is the fuels and infrastructure business that accounts for the about two-thirds of Caltex’s group earnings, while the convenience and retail offering is the other third.

Couche-Tard operates across Canada and in most states in the United States. The company specialises in convenience retail and fuel, boasting that most of its products sold are consumed within an hour of purchase.

It has a strong track record of bedding down acquisitions and has publicly stated plans to hunt more targets in the US and Asia.

It has been sniffing around Australia’s fuel sector recently – taking a close look at the Woolworths petrol business that was later sold to European entrant EG.

Caltex appears to fit its remit. The company, which supplies and sells about one third of the country’s transport fuels, sees its future in convenience retail- much like other service station owners.

It remains whether Couche-Tard firms up its interest – and whether it would act alone.

Street Talk reported on Monday night that Caltex was in the crosshairs of an offshore suitor. The company has a $7.44 billion market capitalisation and net debt worth about another $1 billion.