Alimentation Couche-Tard Inc's buyout of petrol station operator Caltex Australia Ltd has become the latest victim of the coronavirus outbreak, as fuel demand plunges and as companies look inward to get through the crisis.
The decision means the Canadian firm's proposed AU$8.8 billion (€5.15 billion) deal is the biggest buyout of an Australian company to be squashed by the impact of the virus.
The Canadian convenience store chain, which had secured funding commitments for the deal, said it still saw Caltex as a good fit for its expansion into Asia, and would be willing to re-engage once coronavirus-related uncertainty subsides.
Oil Prices
A collapse in oil prices has been of little help for the Australian refiner, which has found itself facing vanishing demand due to restrictions on movement by governments looking to contain the spread of COVID-19, the disease caused by the new coronavirus.
As a major supplier of jet fuel, Caltex has also been hit hard by airlines grounding fleets. It has brought forward the scheduled shutdown of its Lytton refinery to May, and plans to re-start it only when pressure on profit margins ease.
Caltex said it was ready to weather market uncertainty, and was deferring capital spending and reviewing fixed costs. It also said its day-to-day spending requirements should be lower given the fall in crude oil prices.
Rival Offer
Privately owned British convenience store retailer EG Group previously made a rival offer of AU$3.9 billion in cash for Caltex's convenience stores plus shares in a spin-off company made up of its remaining assets.
EG Group did not immediately respond to a request for comment on whether its offer still stands.
Couche-Tard said it has to prioritise safeguarding its own business.
"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 formalise our proposal at that time," Brian Hannasch, chief executive officer of Couche-Tard, said in a statement.
Caltex Chairman Steven Gregg in a separate statement said, "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."
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