Caltex parries takeover with retail site sales
Angela Macdonald-Smith

Caltex Australia, the target of a $8.6 billion takeover bid from a Canadian suitor, has announced plans to sell 25 high-value petrol station sites for about $136 million and raise as much as $500 million through the sale of hybrid securities as it presents an alternative future for the company to investors.

Chief executive Julian Segal said the sale of the sites, which would be followed by the divestment of a second tranche of 25 sites starting in early 2020, is the result of a review of the fuel supplier’s retail network and would allow Caltex to focus on the sites best aligned with its convenience retail strategy.

It would also release capital for alternative uses.

“We are pleased with the strong result delivered for our shareholders, with the divestment coming at a time of attractive valuations for quality freehold property assets,” Mr Segal said in a statement released ahead of an investor briefing in Sydney, where the takeover approach from Alimentation Couche-Tard is expected to be the key topic of interest.

Caltex’s Lytton refinery in Brisbane is one of only four remaining refineries in the country.  Bloomberg

“The proceeds will create additional balance sheet capacity which will allow us to explore capital management opportunities in line with our capital allocation framework,” Mr Segal added.

The sale of hybrid securities, raising between $300 million and $500 million, would diversify Caltex’s funding sources, strengthen the balance sheet and increase financial flexibility, the company said. It would not take place if Caltex is sold.

If they are going to buy Caltex they need to pay a proper price for it

— Chairman Steven Gregg

Addressing the investor briefing, chairman Steven Gregg said the moves were “all part of capital management and the realisation of value for shareholders, and it’s in direct response to a lot of the feedback we have been getting.”

Referring to the takeover approach from Couche-Tard, Mr Gregg restated that Caltex rejected its $34.50 a share offer earlier this week but was seeking to engage further.

“We are not going to leave value on the table,” he said.

“If they are going to buy Caltex they need to pay a proper price for it.”

Mr Gregg also updated investors on the search for a successor to Mr Segal who announced his intention to retire in August. He said a shortlist of external candidates were in the running, as well as one “extremely qualified” internal candidate, executive general manager fuels & infrastructure, Louise Warner.

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