December 24, 2019 / 3:05 AM / 2 months ago

BUZZ-Caltex to Ampol: competition may bite, Couche-Tard may not raise offer - analysts

(Recasts to include Jefferies comments, adds graphic and shares)

** Takeover target Caltex Australia’s decision to rebrand will pressure the petrol pump and convenience store operator’s market share, analysts say

** Caltex will change its name to Ampol and revive the business after Chevron Corp ended a licence agreement to use the Caltex brand in Australia

** Jefferies sees potential loss of market share, margin pressure, loss of licensed dealers and fuel card attrition, as S&P Global Ratings raised similar concerns

** Caltex had rebuffed Canada’s Alimentation Couche-Tard Inc’s A$8.61 bln ($5.96 bln) takeover offer earlier in Dec but said it was willing to consider a higher offer

** Couche-Tard’s proposal supported shares but the premium is no longer valid considering the impending loss of the brand, Jefferies says

** Adds the current proposal should stand but the ability to pay a higher price may not happen

** CTX shares trade at A$34.12 by 0238 GMT, below the offer price of A$34.50

** The transition will take 3-years and cost A$165 mln but may save between A$18-20 mln in license fees; S&P says CTX’s ‘BBB+’ credit rating is stretched and stability for the rating depends on effective capital management

** Chevron signalled its re-entry into Australia after scooping Puma Energy’s local commercial and retail fuels business

** Chevron once used to be the half-owner of Caltex ($1 = 1.4453 Australian dollars)

Reporting by Nikhil Kurian Nainan

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