Speaking as a near decade-long shareholder in this company: For the bulk of that period I felt the company's executives have operated with a high degree of integrity and effectiveness, ranging from the dealing with high-level strategic issues (such as the insightful decision to shutter the Kurnell refinery), down to day-to-day operational issues (for example, the on-time, on-budget actual closure of Kurnell and rehabilitation of the site, the upgrade decisions relating to the Brisbane refinery, as well as the excellent manner in which that operation has been managed, and the decisive addressing of the under-payment of franchisee employees).
However, on the slim chance that the company remains a publicly-listed company by the time of the AGM next year, shareholders will have reasons to ask some sternly worded questions of the company's directors concerning the merit and motive of the sudden decision to spin off part of the company's property portfolio.
Especially when for the previous year or two the company's management - under previous well-regarded CEO and CFO team - had resisted calls from shareholders to de-merge the property assets, saying that the exercise was not value-accretive because of the tax and fee leakage that would arise from such a deal.
(Following submission in 2018 of correspondence to the company in which I outlined - backed by detailed financial analysis - why a de-merger of the property assets would be shareholder value enhancing, I had the good fortune to speak personally with the then-CFO. In that discussion he indicated to me that, after much contemplation and consideration of a de-merger of the property assets, the board had come to the view it was a marginal call, at best, and that the effort-to-reward ratio of such a proposal, irrespective of the way it was to be structured, was too high.)
Fast forward twelve months and the board now mysteriously believes it does suddenly all make sense, after all.
And that it now magically makes sense, they happen to tell the owners of the business just 26 hours before they announce that some other entity is having a tilt at the company.
The timing might all be one HUUUUGE coincidence, but this smacks to me like a bit of self-preservation.
Point being that events of the past few days don't feel to me like what I - as an owner of the business - am being told is occurring on the basis of the impeccable level of good faith to which I have become accustomed during many years as a happy Caltex shareholder.
For some months now I had formed the firm opinion that, if the Caltex board didn't spin out the properties, someone else will buy the company and do it for them.
(See: https://hotcopper.com.au/posts/39159610/single)
Where I was wide of the mark in my assessment was that I was sure that any corporate raider would take the form of a Private Equity entity, as opposed to a trade player.
(https://hotcopper.com.au/posts/39159901/single).
In summary, I don't have much respect for a board of directors that drafts a Target's response that says, "Yeah, nargh; the company is worth more than you are offering," when that same board actively failed to take a necessary and available course of action that would have should have caused the company to trade at fair value in the first place.
Just because a bid for the company has transpired doesn't make me particularly happy.
Because when I contemplate some of the possible alternate histories, the lack of pro-activity on the part of the board would still have left the share price languishing.
Frankly, I expect more from the people that are paid to manage the companies in which I am a shareholder.
.
CTX Price at posting:
$34.50 Sentiment: Hold Disclosure: Held
(20min delay)