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Caltex share price hits $35.50 as new takeover details emerge

We examine Caltex’s response to recent media speculation regarding the emergence of additional takeover bids for the company.

Caltex share price: recent developments

It’s been a busy couple of months for Caltex (ASX: CTX), with the company in late November revealing that it had received a non-binding takeover bid from the Canadian firm, Alimentation Couche Tard (ATD), to acquire all of Caltex’s outstanding shares.

The Caltex share price jumped 12.5% on that news.

Now, media speculation around additional takeover bids have began to circle, with Bloomberg yesterday publishing a piece titled: ‘U.K. Gas-Station Billionaires Weigh Biggest-Ever Deal in Caltex.’

Caltex has today responded to this speculation by clarifying that since the ATD takeover proposal, the company 'has had approaches from a number of parties, including EG Group, who have indicated that they are potentially interested in making a proposal to acquire Caltex or some of its assets.'

Mind you, these ‘approaches’ do not constitute proposals, with the company further noting that:

'Caltex has not received any proposal to acquire Caltex subsequent to the proposals from ATD referred to in Caltex's previous announcement to the ASX on 26 November 2019.'

The company also pointed out that:

'There is no certainty that any binding proposal will be made by any of the parties who have expressed potential interest.'

Though not certain, the Caltex share price still rose as much as 1.68% today – to $35.64 per share by the late afternoon – amidst a backdrop of growing geopolitical tensions between the US and Iran as well as rising oil prices.

The analyst opinion

Examining today’s media release, Royal Bank of Canada’s (RBC) Sydney branch took the opportunity to comment on the unfolding Caltex acquisition situation.

Centrally, RBC believes that it will be the value of a possible takeover bid, not regulatory hurdles that will ultimately be the deciding factor in any potential takeover deal getting done.

Knocking down potential concerns, RBC also noted that:

‘While Caltex is the largest player in the wholesale fuel market (~34% market share), a significant player in retail fuel (~15-17% share) and ~25% of Australian fuel refining capacity, we do not see any prima facie competition concerns with ACT being a potential new entrant into the market.’

RBC currently has a price target of $33.00 per share on Caltex (ASX: CTX), somewhat below the company’s current share price of $35.64.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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