Oil and Gas

UPDATE 1-Caltex Australia says to work with rebuffed Canadian suitor for higher bid

* Caltex sees Couche-Tard as “very serious” bidder

* Flags sharp earnings declines

* Caltex nets A$92 mln from fuel site sales, plans more sales

* Tapping cheap bond market to raise up to A$500 mln

* (Recasts throughout with CEO, CFO comments)

MELBOURNE, Dec 5 (Reuters) - Caltex Australia’s top executives said on Thursday they would work with a Canadian suitor to elicit a higher takeover offer after earlier rejecting its A$8.61 billion ($5.84 billion) approach for the petrol pump and convenience store operator.

The Australian company rebuffed a takeover approach by Canadian convenience store operator Alimentation Couche-Tard Inc earlier this week calling it inadequate but had offered to give the suitor access to some non-public information so that it could get a higher bid.

Caltex Australia’s Chief Financial Officer Matt Halliday said the company considered Couche-Tard a “very serious and credible” bidder.

“We think the right approach is to be constructive to try and help them to come back with a compelling offer,” he told analysts at a strategy briefing. Halliday said Couche-Tard has yet to respond to Caltex’s offer of access to the non-public information.

The comments came on a day when Caltex flagged its earnings would slide this year, announced it had sold 25 fuel sites to release capital and said it would tap cheap bond markets to raise between A$300 million and A$500 million.

Company executives defended the board’s decision to give Couche-Tard limited access to its books without a firm offer on the table, and justified asking for a higher offer compared to the 16% premium from the Canadian company given that Caltex’s shares have been stuck near one-year and three-year troughs.

“The share price recently has been pretty much at a low point,...reflecting more soft trading conditions as the economy is a bit softer. But clearly in our view this is something that is not going to continue forever,” Chief Executive Julian Segal told reporters.

Couche-Tard had no comment on Caltex’s announcements on Thursday, the Canadian firm’s Australian spokespeople said.

With investors uncertain over Couche-Tard’s next move, Caltex’s shares were flat on Thursday, trading below the rejected bid price of A$34.50.

Caltex is under pressure to turn around its business due to weak consumer demand and margin pressures. It disclosed plans last month for an initial public offering of up to 49% of its 250 convenience retail sites to release capital, a plan that Couche-Tard said would have to be called off if it went ahead with an offer.

It warned on Thursday net profit on a “replacement cost” basis this year would be between A$320 million and A$360 million, which at the midpoint would be down 39% from last year.

Caltex said the sale of 25 petrol station sites for A$136 million to two buyers who plan to use them for retail and residential developments had been planned before Couche-Tard’s approach.

The company said it would expand further overseas, where it already has businesses in New Zealand and the Philippines. ($1 = 1.4736 Australian dollars) (Reporting by Sonali Paul; Additional reporting by Niyati Shetty in Bengaluru; Editing by Sonya Hepinstall and Muralikumar Anantharaman)