BY Richard Summerfield
The proposed $5.6bn merger between Canadian convenience store Alimentation Couche-Tard and fuel retailer Caltex Australia has been shelved as the repercussions of the COVID-19 outbreak continue to be felt around the world.
In a statement, Couche-Tard confirmed that while it still believes that Caltex is a good fit for its expansion into Asia, and would be willing to re-engage once coronavirus-related uncertainty subsides, in the short-term it plans to prioritise safeguarding its own business.
“We remain convinced of the long-term financial and strategic merits of an acquisition of Caltex and all the benefits it would offer to the shareholders of both companies,” said Brian Hannasch, president and chief executive of Couche-Tard. “Despite the COVID-19 situation, we have worked to complete due diligence on schedule through a significant investment of time and money. Our current plan would be to reengage the process once there is sufficient clarity as to the global outlook, and the work done to date should mean that we will be able to quickly formalize our proposal at that time.”
He added: “Couche-Tard is focused on managing its own business through this period and prioritizing the health, safety and well-being of its employees, customers and the communities it serves.”
For Caltex, the collapse of the deal comes as oil prices go into freefall. US crude oil prices turned negative as drops in global fuel demand impacted storage capacity and sales. OPEC has agreed to cut production by an initial 9.7 billion barrels per day yet to flow on to the market. In response, Caltex has brought forward a planned maintenance shutdown of its Brisbane refinery in a bid to soften the economic hit.
Steven Gregg, chairman of Caltex, said in a separate statement: “We remain confident in the strength of Caltex as an independent business, and should we receive an approach in the future would be willing to consider it on its merits.”
News: Couche-Tard shelves $5.6 billion Caltex Australia buyout as deal becomes latest virus victim