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Caltex says $8.6bn bid undervalues company

Stuart Condie
Caltex Australia says an $8.6 billion takeover offer undervalues the company

Caltex Australia says the $8.6 billion unsolicited takeover offer from Canadian convenience store operator Alimentation Couche-Tard undervalues the company.

The fuel importer and retailer says it has released non-public information to ACT so it has the opportunity to return with a revised offer.

Caltex contends that the bid as it stands does not represent compelling shareholder value considering factors including a prospective increase in earnings, international growth, and the proposed spin-off of up to 49 per cent of 250 retail sites.

"Caltex has a well-developed strategy, privileged assets, strong leadership and compelling growth opportunities that the board believes will deliver attractive value for its shareholders over time," chairman Steven Gregg said on Tuesday.

"The Caltex board is focused on maximising shareholder value and will carefully consider any proposal that is consistent with this objective."

Last week's $34.50 per share cash offer is the second Caltex has rejected as inadequate.

It already turned away an October 11 bid of $32 per share.

At 1405 AEDT, Caltex shares were 0.73 per cent lower at $34.505, outperforming the benchmark ASX200's overall 2.02 per cent decline.

Royal Bank of Canada analyst Irene Nattel said Caltex's rejection was not entirely unexpected, but that she believes ACT will "remain disciplined" on offer price.

"We would expect that the story will continue to unfold as these situations usually do," Ms Nattel said in a client note.

"Strategically, a potential acquisition of Caltex would be consistent with ATD's (Alimentation Couche-Tard's) five-year plan to double the size of the company through a combination of strong organic performance and acquisitions, and management's commentary on the attractiveness of the Australian market."

ACT chief executive Brian Hannasch has said Couche-Tard, which operates over 16,000 convenience stores in North America and Europe mostly under the Circle K brand, had been looking for an opportunity to enter the Asia-Pacific region for several years.

Nonetheless, Caltex warned shareholders there is no certainty that ACT will return again with a revised proposal.