CST Brands Inc. is beginning an “exploration of strategic alternatives” to further enhance stockholder value, the company has reported.
In order to facilitate the review, the Board of Directors will oversee the process through a committee of outside, independent directors. The strategic review process will be comprehensive and will include a fresh look at several of CST’s previously announced strategic initiatives and plans. BofA Merrill Lynch is advising the company in this process, and J.P. Morgan Chase is serving as a co-advisor.
“We believe there continues to be a disconnect between CST’s intrinsic value and the price of our common stock in the public equity markets,” said Kim Lubel, president and CEO of CST Brands. “For this reason, our Board of Directors is initiating a process to explore and evaluate a wide range of strategic alternatives to maximize value for our stockholders.”
There can be no assurance that the exploration of strategic alternatives will result in a transaction. The company does not intend to provide updates unless or until it determines that disclosure is appropriate or necessary.
“We view CST’s announcements as a very positive development as we too have long believed there is a disconnect between CST’s stock price and the inherent value of its operations,” said Bonnie Herzog, senior analyst for Wells Fargo Securities LLC.
Herzog added, “Regardless of the outcome of its strategic review, we are encouraged by the diligence with which (CST) management has tried to create shareholder value and believe there is significant upside to CST’s stock price,” which Wells Fargo estimated at $36 per share.