Another one bites the dust – no it’s not a Queen revival but news that the long-running takeover attack from a Canadian firm Alimentation Couche Tard (ACD) for Caltex has gone south, a victim of COVID-19.
The Montreal-based convenience store giant has told Caltex it will end discussions about a potential $8.8 billion takeover “due to the high level of economic uncertainty caused by the COVID-19 pandemic”.
It noted it did not raise any material issues with Caltex in the period of due diligence and continues to see it as a strong strategic fit for its business, especially its Asia Pacific strategy.
“ATD has communicated an intention to seek to re-engage once there is sufficient clarity as to the global outlook, although there is no certainty that ATD will ultimately do so,” Caltex said yesterday.
“In response to the COVID-19 and the changing dynamics of global hydrocarbon markets, Caltex has already taken decisive action to ensure the health and safety of our people, protect our assets and market-leading position and optimise cash flows and to position for the future,” Caltex told shareholders on Monday
Caltex says it has $2.7 billion of debt available and the declining oil price will ‘’meaningfully further reduce the group’s working capital requirements”.
Demand for key products petrol and jet fuel have collapsed since social distancing and business lockdowns started in late March. That saw Caltex close the Lytton refinery in Brisbane for earlier than planned maintenance.
Caltex said in yesterday’s statement that it is looking for savings in addition to the previously announced $100 million cost-out program being delivered by the end of 2020. As well it is continuing to cut group Capex 2020 spending below $250m by focussing only on critical business items.
Caltex shares fell 7.8% yesterday to $21.72 and will go lower.
The ACD offer would have been made at well above $35 a share.
