PERTH (Reuters) - U.S. energy giant Chevron sold its entire stake in refiner Caltex Australia Ltd for A$4.7 billion ($3.7 billion) in Asia’s biggest block deal this year, as falling oil prices and high costs hurt margins.
Offshore institutional investor demand for the 50 percent stake in Australia’s biggest refiner was strong, with bidding driving the final price to A$35 a share, a spokeswoman for Goldman Sachs, the sole underwriter for the deal, confirmed on Saturday.
The bank offered the 135 million shares at a floor price of A$34.20 each late on Friday, a discount of 9.7 percent to the closing price.
Caltex shares have risen 10.7 percent this year, outpacing a 9.4 percent rise in the benchmark Australian share index.
The $3.7 billion deal is Asia’s largest block transaction this year, eclipsing the government of India’s $3.6 billion sale of its stake in Coal India Ltd in January.
Australia has seen a rush of block trades in the past month as investors look to capitalise on strong valuations following a share market that is rising on hopes of more interest rate cuts.
A halving in global oil prices since mid-2014 has added to the pressures on Australian refiners, which are grappling with ageing equipment, cheaper imports and high costs. Many firms, including Caltex Australia, have closed refineries while others have restructured operations.
Chevron is the latest global major to exit Australia’s refining industry. Last year, Royal Dutch Shell Plc sold its Australian petrol station and refinery operations for A$2.9 billion and BP Plc, which shut down its Bulwer Island oil refinery in Queensland, is also selling its Australian bitumen business.($1 = 1.2905 Australian dollars)
Reporting by Morag MacKinnon; With additional reporting by Denny Thomas and Byron Kaye; Editing by Kim Coghill