EG Group has lined up some of the biggest balance sheets in the market to help fund its potential bid for Caltex Australia.
While Canadian convenience retailer Couche-Tard and others are keen to poke holes in EG’s funding capability, the petrol station owner appears to be doing everything it can to get the capital to be in with a serious chance of taking Caltex out.
Street Talk can reveal Jefferies Australia has been joined by Wall Street giants Bank of America and Citigroup on the advisory ticket.
It’s no secret Citi and Bank of America have two of the biggest balance sheets in investment banking, and are keen lenders to Australian corporates to fund acquisitions.
And it was Citi which advised and funded EG Group when it secured a foothold in the Australian market last year, by buying Woolworths’ chunky $1.73 billion petrol station portfolio.
Founded in 2001 by brothers Zuber and Mohsin Issa, Blackburn-based EG said then that it wanted to use the Woolworths Petrol purchase to establish a solid base to further expand in the region.
Of course, even if EG does get a credible bid submitted, you’d have to think there might be stiff opposition from the Australian Competition and Consumer Commission.
Two years ago, the ACCC blocked BP acquiring a network of retail service station sites owned by Woolworths. Instead, EG acquired the Woolworths service station sites.
ACCC chairman Rod Sims is unlikely to discard the concerns he had in December 2017 about loss of competition from concentration of ownership of fuel distribution. BP has a 20 per cent market share in wholesale petrol distribution, while Caltex has a wholesale market share of 34 per cent.
Since completing the Woolies deal last April, EG Group, which is backed by buyout firm TDR Capital, has been acquiring assets in the US, most recently the Cumberland Farms network in the north-east and Florida.
It comes as Julian Segal-led Caltex and Couche-Tard’s senior management team, headed by chief executive Brian Hannasch and chief financial officer Claude Tessier, prepare for a management presentation on Thursday in relation to Couche-Tard’s $8.6 billion takeover offer, as foreshadowed by this column.
EG’s Australian business is run by Mike McMenamin, a former long-term Caltex executive who later headed up the sale process for the fuels business at Woolworths.
Extracted from AFR