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As a major supplier of jet fuel, Caltex has also been hit hard by airlines grounding fleets.

Mick Tsikas/Reuters

Alimentation Couche-Tard Inc’s buyout of petrol station operator Caltex Australia Ltd has become the latest victim of the coronavirus outbreak, as fuel demand plunges and as companies look inward to get through the crisis.

The decision means the Canadian firm’s proposed $8.8 billion (US$5.6 billion) deal is the biggest buyout of an Australian company to be squashed by the impact of the virus, which has led to 69 deaths in Australia and 1,580 in Canada.

The convenience store chain, which had secured funding commitments for the deal, said it still saw Caltex as a good fit for its expansion into Asia, and would be willing to re-engage once coronavirus-related uncertainty subsides.

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A collapse in oil prices has been of little help for the Australian refiner which has found itself facing vanishing demand due to restrictions on movement by governments looking to contain the spread of COVID-19, the disease caused by the new coronavirus.

As a major supplier of jet fuel, Caltex has also been hit hard by airlines grounding fleets. It has brought forward the scheduled shutdown of its Lytton refinery to May, and plans to restart it only when pressure on profit margins ease.

Shares of Caltex are trading nearly 40% lower than Couche-Tard’s last offer price of A$35.25 a share. On Monday, the stock was down as much as 9.1% by midday, versus a broader market decline of 1.3%.

Caltex said it was ready to weather market uncertainty, and was deferring capital spending and reviewing fixed costs. It also said its day-to-day spending requirements should be lower given the fall in crude oil prices.

The Sydney-based firm said it has A$2.7 billion in debt facilities, of which A$1.4 billion is in cash and undrawn facilities.

Privately owned British convenience store retailer EG Group previously made a rival offer of A$3.9 billion in cash for Caltex’s convenience stores plus shares in a spinoff company made up of its remaining assets.

EG Group did not immediately respond to a request for comment on whether its offer still stands.

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Couche-Tard said it has to prioritize safeguarding its own business.

“Our current plan would be to re-engage the process once there is sufficient clarity as to the global outlook, and the work done to date should mean that we will be able to quickly formalize our proposal at that time,” Brian Hannasch, chief executive officer of Couche-Tard, said in a statement.

Caltex Chairman Steven Gregg in a separate statement said, “We remain confident in the strength of Caltex as an independent business, and should we receive an approach in the future would be willing to consider it on its merits.”

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