Caltex share price on watch as takeover rumours swirl

The Caltex Australia Limited (ASX:CTX) share price could be on the move today after reports claimed that a bidding war was brewing…

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The Caltex Australia Limited (ASX: CTX) share price could be on the rise on Tuesday amid speculation that a bidding war for the fuel retailer could be brewing.

What is happening?

On November 26 Caltex revealed that it had received an unsolicited, conditional, confidential, non-binding and indicative proposal from Canada's Alimentation Couche-Tard.

Alimentation Couche-Tard offered to acquire Caltex by way of scheme of arrangement at an indicative cash price of $34.50 per share less any dividends. This valued Caltex at ~$8.6 billion.

Approximately a week later the Caltex board revealed that it believed the proposal undervalued the company and did not represent compelling value for shareholders. As a result, it rejected the proposal.

According to Bloomberg, sources have revealed that another suitor is interested in acquiring the fuel retailer.

The report advises that UK-based EG Group, the world's largest independent fuel station and convenience store chains, is considering a bid for fuel retailer.

EG Group is understood to be working with a financial adviser as it looks into making an offer for Caltex.

What is EG Group?

UK-based EG Group was formed in 2016 when Euro Garages merged with TDR's European Forecourt Retail Group.

It owns and operates a diversified portfolio of sites across Europe, North America and Australia, employing over 28,500 staff through ~4,700 sites.

It has been on a buying spree in recent years as it aims to expand its reach globally. In November 2018 it agreed to pay $1.7 billion to acquire 540 Australian fuel convenience sites from Woolworths Group Ltd (ASX: WOW).

In the same year it paid US$2.15 billion to acquire US supermarket giant Kroger's US convenience store business. And in July of last year it bought 600 locations owned by US-based Cumberland Farms. The latter deal made it the fifth-largest independent convenience store operator in the United States.

The company is rumoured to be planning an IPO, which could provide it with some of the funds required to launch a takeover of Caltex.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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