Casey's Reiterates Rejection
Cites low number of share tendered so far after Couche-Tard extends offer to Aug. 6
LAVAL, Quebec & ANKENY, Iowa -- Casey's General Stores Inc. has rejected Alimentation Couche-Tard Inc.'s latest acquisition move. As reported in a Morgan Keegan/CSP Daily News Flash yesterday, Couche-Tard on Monday said that the previously announced tender offer by its indirect wholly owned subsidiary to acquire all of the outstanding shares of common stock of Casey's for $36.00 per share in cash has been extended and will now expire at 5:00 p.m. Eastern on Aug. 6, 2010.
All other terms and conditions of the tender offer remain unchanged, Couche-Tard said. As [image-nocss] of 12:00 a.m. Eastern on July 9, 2010, 9,792,196 shares of common stock of Casey's (including 275,732 shares subject to guarantees of delivery), representing approximately 19.2% of the outstanding shares of Casey's have been tendered to Couche-Tard by Casey's shareholders and not withdrawn pursuant to the offer, it said.
"The low number of shares tendered reflects what Casey's has heard from many shareholdersthat this hostile, highly conditional offer is inadequate. The response of our shareholders to Couche-Tard's tender offer speaks for itself. We believe that our shareholders recognize Casey's industry-leading performance and superior value potential. The Casey's board reiterates its recommendation that shareholders not tender their shares into the offer," Casey's said in a statement yesterday.
Robert J. Myers, president and CEO of Casey's, said in April in a letter to Couche-Tard president and CEO Alain Bouchard, "We are very disappointed that you have decided to launch a hostile public campaign regarding your unsolicited proposal to acquire Casey's for $36.00 per share in cash... Your proposal significantly undervalues Casey's and is not in the best interests of the corporation." (Click here for more details.)
And in June, Myers said, "Our board's position is clearshareholders should reject Couche-Tard's offer and not tender their shares. We believe this is a self-serving and transparent attempt by Couche-Tard to take significant value that rightly belongs to Casey's shareholders. We believe our shareholders will reap far greater value from our industry leading performance, significant growth opportunities, successful execution of our strategic initiatives, strong balance sheet and real estate position, and the benefits of our highly differentiated business model and well-regarded self-distribution system." (Click here for more details.)
"This is a relatively low number [of shares] in our view, but not entirely surprising, and suggests that Casey's shareholders want a higher price for their shares," said Desjardins Securities analyst Martin Landry in a research note: "We would not be surprised to see Couche-Tard raise its offer to gather additional support for its bid; however, the low number of shares tendered implies that both parties are still a long way from a transaction."
He added, "We continue to view the potential acquisition of Casey's positively, even under a scenario where Couche-Tard has to raise its offer price."
Both companies are expected to meet next month in a federal courthouse in Des Moines to discuss lawsuits filed against each other, according to a Des Moines Register report. The chains also face a showdown later this fall at Casey's annual stockholder meeting. Couche-Tard, in a bid to remove the financial obstacles placed in front of it, is attempting to elect its own slate of officers to Casey's board.
Couche-Tard, which operates only 28 stores within one mile of an existing Casey's, has said it wants to buy the chain so it can expand its reach in the Midwest, the report said. Government documents indicated that a merged company immediately would become the nation's largest chain of corporately owned convenience stores.
Credit Suisse Securities (USA) LLC is acting as financial advisor to Couche-Tard and dealer manager for Couche-Tard's offer. Dewey & LeBoeuf LLP and Nyemaster, Goode, West, Hansell & O'Brien, P.C. are acting as legal counsel. Innisfree M&A Incorporated is acting as information agent for Couche-Tard's offer.
Goldman, Sachs & Co. is acting as financial advisor to Casey's, and Cravath, Swaine & Moore LLP and Ahlers & Cooney, PC are providing legal advice.
Laval, Quebec-based Couche-Tard operates a network of 5,883 convenience stores located in 11 large geographic markets, including eight in the United States covering 43 states and the District of Columbia, and three in Canada covering all 10 provinces.
Casey's General Stores Inc., based in Ankeny, Iowa, has 1,513 corporate stores innine states.
(Click here for previous CSP Daily News coverage of the Casey's/Couche-Tard saga.)