Couche-Tard seeks biggest deal in history with C$7.7B bid for Australian firm

Alimentation Couche-Tard Inc. is proposing the largest acquisition in the company’s history with a $7.7 billion bid for Australia’s largest retail fuel and convenience chain.

The unsolicited purchase offer for Sydney-based Caltex Australia Ltd. — its second this year — would allow the Quebec-based retailer to expand beyond North America and Europe as it aims to double the company’s size.

Couche-Tard CEO Brian Hannasch described the proposal as “a very compelling offer” for Caltex shareholders.

“Alimentation Couche-Tard’s management team has been looking into the Asia-Pacific region for several years as a potential market for our continued growth and we see many opportunities,” he said in a news release.

“With Caltex, we see a potential opportunity to leverage our leading global position in the convenience retail market, and we would seek to bring all our operating expertise to bear to help support and grow the Caltex business.”

The proposal for AU$34.50 per share is for the redemption of all Caltex shares outstanding. Couche-Tard already owns about two per cent of Caltex shares.

This is an unsolicited, non-binding, conditional and confidential offer, Caltex said in a statement released Tuesday morning local time.

The proposal also includes the payment of certain dividends to shareholders at the time of the eventual takeover.

Caltex says Couche-Tard’s previous offer in October at AU$32 per share was rejected for being value too low.

The proposal includes no material asset sales or divestments and precludes Caltex’s planned property public offering.

Keith Howlett of Desjardins Capital Markets says the offer has likely come to light because Caltex recently announced that it was planning to spin off a 49 per cent interest in 250 retail sites into a REIT. In addition, Caltex shares have performed poorly and the current CEO has announced his plan to retire.

“Given the complexity of the transaction, including the divestiture of non-retail assets, we conclude that Couche-Tard management foresees significant upside to the retail fuel and convenience business in Australia,” he said in a report.

The potential acquisition would be consistent with Couche-Tard’s five-year plan to double its size, added Irene Nattel of RBC Capital Markets.

“Based on conversations with management, Australian c-store networks are compelling due to a well-developed fuels industry, while generally undermanaged inside store operations provide meaningful opportunity to surface incremental value,” she wrote in a report.

Caltex operates approximately 2,000 service stations where it operates gasoline and retail sales.

The offer is subject to audit and approval, as well as a vote of the boards of directors of both companies involved.

Alimentation Couche-Tard said after markets closed on Tuesday that its net income surged by 21.5 per cent to US$579.4 million in its fiscal second quarter, up from US$477 million a year earlier.

Excluding one-time items, adjusted profits for the three months ended Oct. 13 were US$571 million or 51 cents per diluted share, compared with US$466 million or 41 cents per share in the prior year. The retailer benefited from a 27.7 per cent boost in U.S. fuel margins even though fuel revenues dipped nearly eight per cent.

Revenues decreased to US$13.68 billion from US$14.7 billion in the second quarter of 2018 with merchandise revenues increasing 2.3 per cent to US$3.5 billion and network fuel revenues decreasing 8.8 per cent to US$9.9 billion.

Merchandise same-store sales grew 3.2 per cent in the U.S., 2.1 per cent in Canada and 3.3 per cent in Europe.

Couche-Tard was expected to earn 48 cents per share in adjusted profits on US$14 million of revenues, according to financial markets data firm Refinitiv.

“We continue to experience steady results in our overall business with strong fuel performance and merchandise sales,” Hannasch stated in a news release.

“In the convenience sector, we are starting to see good traction from the different projects we launched, such as food pilots, our digital upsell platform, and the redesign of our European stores.

Couche-Tard’s convenience store network includes nearly 9,800 stores throughout North America and 2,700 in Europe. It employs almost 133,000 people and has licensing agreements for about 2,250 stores operated under the Circle K banner in 16 other countries and territories.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Healthy Living Expo encourages Red Deerians to accomplish New Year’s resolution

Many individuals make the New Year’s resolution to live a healthier life.… Continue reading

Red Deer extreme cold snap expected to end after weekend, according to Environment Canada

Expect it to get a little warmer outside after this weekend. While… Continue reading

Ponoka RCMP asks public to help find missing person

Ponoka RCMP are looking for a woman who went missing Friday night.… Continue reading

Stettler son accused of murdering his father

The RCMP have laid charges against a son charged with killing his… Continue reading

Canada to give $25,000 to families of each Canadian who died on Flight PS752

OTTAWA — Families of the Canadian victims on the Ukrainian passenger jet… Continue reading

Fashion Fridays: Look your best this year

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

Your community calendar

Jan. 22 Downtown House Senior Center (5414 43 St.) in Red Deer… Continue reading

Eastern Newfoundland reeling, search underway for missing man after blizzard

ST. JOHN’S, N.L. — Eastern Newfoundland struggled Saturday to remove record-breaking snowdrifts… Continue reading

Disrespectful that Horgan won’t meet during northern B.C. tour: hereditary chief

HOUSTON, B.C. — It’s disrespectful that Premier John Horgan won’t meet with… Continue reading

Royal deal clears way for Harry, Meghan part-time Canada move: experts

VANCOUVER — Royal watchers say a deal reached by Prince Harry and… Continue reading

Thousands gather for Women’s March rallies across the US

WASHINGTON — Thousands gathered in cities across the country Saturday as part… Continue reading

Sanders steps up appeals to women after flap with Warren

PORTSMOUTH, N.H. — Democratic presidential candidate Bernie Sanders stepped up his pitch… Continue reading

National Archives: ‘We made a mistake’ altering Trump photos

WEST PALM BEACH, Fla. — The National Archives said Saturday it made… Continue reading

Trudeau, ministers head to Winnipeg for cabinet retreat, western outreach

OTTAWA — Prime Minister Justin Trudeau is reviving his practice of holding… Continue reading

Most Read