Published: Thu, November 28, 2019
Markets | By Otis Pena

Couche-Tard Makes $5.8B Bid for Australia's Largest Service Station Network

Couche-Tard Makes $5.8B Bid for Australia's Largest Service Station Network

SunTrust Banks upped their target price on Alimentation Couche-Tard from C$92.00 to C$93.00 in a report on Friday, September 6th.

He said Couche-Tard, which operates over 16,000 convenience stores in North America and Europe, mostly under the Circle K brand, had been looking into the Asia-Pacific region for several years as a potential market to grow into.

Couche-Tard on Monday had sweetened its approach for fuel retailer Caltex Australia with a A$8.61 billion offer in a bid to expand into Asia.

Alimentation Couche-Tard Inc operates and licenses convenience stores.

Weighted Alpha tells that how much a stock has risen or fallen over an one-year period with a higher weighting for recent price activity.

The proposal is subject to a number of conditions, including "due diligence, organising necessary financing for the transaction, no material asset sales, divestments or similar transactions" as well as Foreign Investment Review Board approval and the ACT Board and a unanimous recommendation by the Caltex Board.

Caltex, which earlier this week announced it planned an initial public offering of a 49 per cent stake in 250 retail freehold sites, said it was considering the proposal.

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The company said its board is now considering the proposal, including obtaining advice from its financial and legal advisers.

JP Morgan analyst Shaun Cousins said the FIRB approval may be hard given the nature of the infrastructure and terminal assets in play.

Following the reveal, the share values for Caltex jumped by around 12.7 per cent to $33.56, following a delayed start.

These include Australia's biggest "tank farm" at Kurnell, where there is also deep water port access, with pipeline access to the airport, western Sydney and then to Newcastle and the Lytton refinery and associated Brisbane terminal infrastructure.

The retailer confirmed Tuesday that it 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.

A Couche Tard convenience store is shown in Montreal, Friday, October 5, 2012.

"The announcement of Caltex's intention to undertake an IPO follows significant work Caltex has undertaken over the last 18 months to release value to its shareholders from its property portfolio and builds upon the network review announced in August", Caltex said. The deal may be neutral or up to 6% accretive to earnings per share which is about C$1 to the share price, he said. "Importantly for Caltex's customers, partners and staff, we are a committed buyer of the entire Caltex business".

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