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Alimentation Couche-Tard has made a US$5.8-billion play for Australian company Caltex.

Andrej Ivanov/The Globe and Mail

Canadian convenience store giant Alimentation Couche-Tard is trying to take its biggest bite yet, making a US$5.8-billion play for Caltex Australia Ltd. as it pursues its global expansion.

Laval, Que.-based Couche-Tard offered to pay AU$34.50 in cash per share for Caltex, increasing an earlier proposal of $32 per share that was rejected, Caltex said early Tuesday. The offer is equivalent to roughly $7.8-billion.

Caltex said it was considering the non-binding bid and that talks were at a preliminary stage.

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Couche-Tard, one of the world’s biggest chain of convenience stores, operates under the name Circle K in most places and Couche-Tard in Quebec. The company has been hunting for its next big takeover and many observers expected a deal in the Asia region.

Executives have commented in recent weeks that takeover targets in North America have become expensive. And the company has shown a willingness in the past to step away from deals it finds too pricey.

Today, together with Japanese rival 7-Eleven Holdings, Couche-Tard is among the world’s biggest convenience store players. In 2017, the company finalized its US$4.4-billion takeover of Texas-based CST Brands, its biggest purchase. The company has more than 16,000 stores worldwide.

Alain Bouchard, the executive chairman and founder, has turned Couche-Tard into one of the industry’s leading consolidators in recent years, with several major deals completed. The company has continued to expand its store count and revenue dramatically, doubling in size several times through acquisitions in the United States and Europe.

Couche-Tard last year grew it profit 10 per cent to US$1.8-billion and increased sales 15 per cent to US$59.1-billion. Mr. Bouchard has set a goal to double net earnings again within five years.

Earlier this year, chief executive Brian Hannasch characterized the goal as “ambitious” but achievable. To get there, Couche-Tard has to grow sales of existing stores while making further acquisitions, he said.

“[The goal] is founded on the understanding of the current and future market dynamics, upcoming trends in convenience and fuel as well as our deeply rooted aspirations to improve the customer journey and drive more traffic into our locations,” Mr. Hannasch said.

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The Couche-Tard offer could be complicated by a plan announced by Caltex Monday to launch an initial public offering of a 49-per-cent stake in 250 of its locations.

Caltex gets about 23% of its annual revenue from its convenience and retail operations, with its fuel and infrastructure business making up the rest, according to Bloomberg data.

Couche-Tard later confirmed it made an offer, noting it remains subject to various conditions including Caltex not moving forward with its planned property IPO or any other transactions.

“We believe this is a very compelling offer for Caltex shareholders, representing an excellent premium and certainty of value today,” Mr. Hannasch said in a statement Tuesday. “With Caltex, we see a potential opportunity to leverage our leading global position in the convenience retail market, and we would seek to bring all our operating expertise to bear to help support and grow the Caltex business.”

The CEO noted Couche-Tard wants to buy all of Caltex and not just a piece. He said his team is willing and prepared to engage with Caltex so that the offer can be put to Caltex shareholders “as soon as possible.”

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