1. News
March 2, 2020

Caltex Australia rejects EG Group’s $3.9bn acquisition proposal

Transport fuel supplier Caltex Australia has declined the $3.9bn acquisition proposal from UK-based retailer EG Group.

Transport fuel supplier Caltex Australia has declined the $3.9bn acquisition proposal from UK-based retailer EG Group.

The move comes after Caltex received a non-binding, indicative and conditional proposal from EG Group last month to acquire all of the shares in the company through a scheme of arrangement.

Caltex’s board has considered EG Group’s acquisition offer while taking into account the associated risks, costs and complexities.

Furthermore, the board obtained advice from its financial and legal advisers, as well as considered feedback from the company’s shareholders.

Caltex Australia said in a statement: “The board has concluded that the EG proposal undervalues the company and does not represent compelling value for Caltex’s shareholders.

“However, the Caltex board considers that it is in the interests of Caltex shareholders to engage further with EG. Accordingly, Caltex has offered to engage further with EG in relation to a potential transaction.”

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The company further said there is no certainty that the discussions between both the companies will result in EG improving its proposal or in making a binding proposal.

If implemented, EG would have acquired Caltex’s convenience retail business, as part of the proposal.

The proposal also provides for Caltex to continue paying dividends to its shareholders in the ordinary course of business.

EG Group’s offer came after Canadian convenience store operator Alimentation Couche-Tard (ACT) proposed to acquire Caltex last November.

ACT initially submitted a confidential non-binding indicative proposal in October 2019 to acquire Caltex through a scheme of arrangement at a cash price of A$32.00 ($21) per ordinary share.