The Caltex Australia Limited (ASX: CTX) share price could be on the move today following the release of an update on its refiner margins and takeover discussions.
Refiner margins.
During the fourth quarter of 2019 the Caltex Refiner Margin (CRM) came in at US$7.51 per barrel. This was down from US$10.53 per barrel in the third quarter and from US$7.77 per barrel a year earlier.
Positively, Caltex reported an improved operational performance during the fourth quarter. This saw CRM sales from production of 1,586 ML. This was higher than both the third quarter and the prior corresponding period.
In light of this, Caltex has reconfirmed its profit guidance provided on December 5 for RCOP EBIT. It continues to expect this to be in the range of $580 million to $620 million.
However, unaudited profit guidance for Lytton refinery EBIT in 2019 has been revised down slightly to $70 million. This reflects lower than expected refiner margin conditions in December.
Takeover update.
Caltex also provided the market with an update on the unsolicited, conditional, confidential, non-binding and indicative proposal from Alimentation Couche-Tard.
Late last year the Canadian fuel retailer offered to acquire all of the shares in Caltex by way of scheme of arrangement at an indicative cash price of $34.50 per share. This is less any dividends declared by Caltex.
Although the Caltex board concluded that this offer undervalued the company and did not represent compelling value for shareholders, it offered to provide Alimentation Couche-Tard with selected non-public information to allow it to formulate a revised proposal.
This morning Caltex revealed that it has entered into a confidentiality agreement with Alimentation Couche-Tard to facilitate the provision of the aforementioned non-public information.
Though, once again, management warned that there is no certainty that the discussions will result in Alimentation Couche-Tard improving its offer.
