Caltex Australia Limited pays $115 million for a stake in SEAOIL

The Caltex Australia Limited (ASX: CTX) share price will be one to watch on Friday after it made a positive announcement after the market closed.

What happened?

This afternoon the fuel retailer announced that it has signed a definitive agreement forming a strategic partnership with SEAOIL Philippines.

SEAOIL is the leading independent fuel company in the Philippines and fourth-largest market participant.

According to the release, Caltex will acquire a 20% ownership interest in SEAOIL and supply fuel to its retail network via Caltex’s fuel sourcing and shipping business, Ampol Singapore.

This transaction is expected to support SEAOIL’s growth strategy, which aims to double the company’s retail network and terminal storage capacity over the next five years.

The 20% equity interest is being acquired for approximately $115 million at prevailing exchange rates.

The investment will be funded through existing debt facilities and is expected to be EPS accretive and generate returns above cost of capital in its first full year of ownership.

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Motley Fool contributor Motley Fool Staff has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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