The Caltex (ASX: CTX) share price is down over 1% after providing an update about the takeover offer.
Caltex Australia is known for the popular fuel and convenience stores. The multi-billion dollar company also operates in the petroleum industry by buying, refining and distributing fuel products throughout Australia. It’s been in the business more than 100 years.
Caltex’s Takeover Update
Caltex has provided an update to the takeover offer that it received around a week ago.
In this morning’s announcement the petrol business reminded investors that the offer is unsolicited, conditional, confidential, non-binding and indicative. In other words, there was no guarantee it would go through and there were a lot of steps to go through.
The takeover offer was at a price of $34.50 per share, less any dividends declared by Caltex.
The Caltex Board has concluded that the proposal undervalues the company and does not represent compelling value for Caltex’s shareholders.
However, the Board has offered to provide Alimentation Couche-Tard Inc (ATD) with selected non-public information to allow the Canadian business to come up with a revised proposal.
The Caltex Board came to the conclusion that the offer was undervalued after getting advice from its financial, legal and tax advisers, whilst also receiving feedback from its shareholders.
There are various factors of why the Caltex Board thinks the offer is undervalued including: the strategic value of its assets, the view that Caltex is currently at a low point in its earnings, the consistent performance of its Fuel & Infrastructure and its international growth trajectory, the significant opportunities available for the Convenience Retail business, the proposed IPO of a 49% interest in its 250 core sites, finally there are other initiatives that are being considered.
There is no certainty that discussions between Caltex and ATD will result in a revised proposal from ATD.
Caltex Board Comments
Caltex Chairman Steven Gregg said: “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.
We look forward to sharing further details on the execution of our strategic plan at our Investor Day on 5 December. The Caltex Board is focused on maximising shareholder value and will carefully consider any proposal that is consistent with this objective.”
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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.