Couche-Tard Inc. is backing off its attempt to acquire Australia's largest service station operator.
The Canada-based retailer was nearing the end of its due diligence of Caltex Australia Ltd., confirming that Caltex "is a strong strategic fit for Couche-Tard and an important component of its Asia Pacific expansion strategy," according to the company.
However, the COVID-19 pandemic and the disruption caused by the spread of the virus is leading to uncertainty around the globe.
That uncertainty and the impact it is having on Couche-Tard's outlook for Caltex's business, the company said it is not in a position to make a revised proposal at this time, despite having secured the necessary financing commitments.
"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 CEO 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 re-engage 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."
Couche-Tard began its pursuit of Caltex in early October with an initial offer of A$32.00 per share, which Caltex rejected as inadequate. In mid-November, it upped its bid to A$34.50, as Convenience Store News previously reported.
Following another rejection by the Caltex board of directors, Couche-Tard submitted a revised bid to Caltex Australia Ltd. to acquire 100 percent of the company in February. Under that bid, Couche-Tard offered to pay a cash price of A$35.25, or U.S. $23.73, per ordinary share.
"Since receiving the unsolicited approach from Couche-Tard in late 2019, the board has carefully assessed all proposals received with a focus on maximizing shareholder value. The Caltex and [Couche-Tard] teams have worked together constructively during the engagement period despite the challenges from COVID-19.
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," said Caltex Chairman Steven Gregg. Laval-based Couche-Tard has more than 16,000 sites across 26 countries and regions. Its global brand is Circle K.