ACCC Puts Objection over Caltex Bid

Submitted by Jim Thesiger on 2 December, 2009 - 17:22

Australian Competition and Consumer Commission (ACCC) have blocked Caltex Australia’s (CTX) $300 million worth of acquisition bid for ExxonMobil’s Australian petrol stations. According to the regulator, the acquisition could harm the competition in the industry. The regulator expressed its concerns about 53 sites out of 300. However, it also added that the agreement could lead to a stable price increase in Sydney, Adelaide, Brisbane and Melbourne. Caltex Australia is one of the key players in the petroleum industry in Australia that focuses on refining, purchase, marketing and distribution of petroleum products and operates many convenience stores in the country.

Caltex came up with its proposal in last May in response to which ACCC issued a detailed statement of issues critical of the acquisition. The regulator also called for further comments from the involved parties. ACCC is expected to issue more information regarding its decision of blocking the Caltex bid later today. Adrian Wood, the Macquarie Equities analyst previously stated that he expected the deal to be accepted by ACCC in some form. He assumed that Caltex would be allowed to purchase 250 of the Mobil stations. Mr. Wood also added that blocking the deal would make it more difficult for the Government to push the company to go for the Australian refinery purchase.

The Caltex management on the other hand expressed its determination to move forward with its proposal for the Mobil Service stations acquisition despite the objections presented by the Australian Competition and Consumer Commission. Julian Segal, the managing director of the company stated that Caltex might consider ignoring the decision made by ACCC regarding its deal if they fail to convince the regulator to withdraw its objection. Mr. Segal also added that his company will maintain its business strategy regardless of the end result. Caltex lost 2.5 percent or 24 cents to its stock price following the news of the ACCC blocking its $300 million acquisition bid.