Casey's Will Buy Back $500 Million of Stock in Bid to Fend Off Couche-Tard
Casey’s General Stores Inc. offered to buy back as much as $500 million in stock at a price that tops Alimentation Couche-Tard Inc.’s revised offer for the U.S. convenience-store chain.
Casey’s will pay $38 to $40 a share, using cash and debt financing to execute a modified “Dutch auction” self-tender offer, the Ankeny, Iowa-based company said today in a statement. Casey’s said Couche-Tard’s offer of $36.75 undervalues the company and urged shareholders not to tender their stock.
Couche-Tard said in the statement it is evaluating options after Casey’s said the repurchase, equal to about 25 percent of outstanding stock, will enable expansion and provide greater returns to shareholders. Casey’s has fended off Couche-Tard since April, when the Laval, Quebec-based company proposed a takeover at $36 a share.
“Couche-Tard has been very forward that they do not believe shares are worth north of $38,” Ben Brownlow, an analyst with Memphis, Tennessee-based Morgan Keegan & Co., said in a telephone interview. Morgan Keegan has an “outperform” rating on Casey’s stock.
Casey’s rose $1.10, or 3 percent, to $37.60 at 12:28 p.m. in New York Stock Exchange composite trading. Before today, the shares had advanced 16 percent since April 8, a day before Couche-Tard’s unsolicited bid.
Disappointed Suitor
Alain Bouchard, Couche-Tard’s chief executive officer, said in the statement that the company is disappointed Casey’s intends to buy back “only 25 percent of the shares without even sitting down to talk to us.” Casey’s called Couche-Tard’s bid an “inadequate, self-serving offer.”
The Canadian chain began an unsolicited tender offer for Casey’s last month, urging the U.S. company to accept the bid or face a proxy fight. Couche-Tard said it plans to nominate nine independent candidates for election to Casey’s board.
Casey’s sued Couche-Tard last month for allegedly dumping almost 2 million shares of the U.S. retailer immediately after offering to buy it for $1.9 billion.
After announcing its bid April 9, Couche-Tard sold its Casey’s shares, reaping more than $10 million and depressing their value, Casey’s said in a lawsuit filed June 11 in federal court in Davenport, Iowa. Couche-Tard said the suit meritless and that it would defend against the claims.
To contact the reporters on this story: Chris Burritt in Greensboro, North Carolina, at cburritt@bloomberg.net; Niveditha Ravi in New York at nravi1@bloomberg.net.
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