Casey’s General Stores Inc. advised shareholders to reject a sweetened takeover bid from Alimentation Couche-Tard Inc., saying a third party made a higher offer for the U.S. convenience-store chain.
The third party, which Casey’s didn’t name, made a preliminary bid of $40 a share, or more than $2 billion, according to a statement today. Couche-Tard responded by accusing Casey’s of trying to “artificially inflate” the stock.
Casey’s has rebuffed Couche-Tard’s overtures since April, forcing the Canadian convenience-store chain to raise its offer twice, the last time to $38.50, in an effort to sway the board. Analysts peg Casey’s value at $45 a share without pricing in a takeover, Casey’s said.
“I think there’s a 50-50 chance Casey’s stays independent,” said Charles Cerankosky, an equity analyst at Cleveland-based Northcoast Research. “Casey’s shares will go higher, and we think the takeout value is considerably higher than either bid.”
While the third-party bid also fails to reflect the stock’s value, the board has authorized discussions to see if the parties can reach an agreement, Casey’s said. Chief Financial Officer Bill Walljasper didn’t respond to messages, and Paul Caminiti at Sard Verbinnen & Co., which is representing Casey’s, declined to comment.
Casey’s rose $3.86, or 9.9 percent, to $42.76 at 4 p.m. New York time in Nasdaq Stock Market trading. The gain was the largest in five months.
Couche-Tard, based in Laval, Quebec, said it’s pleased that Casey’s is considering a possible sale, and that it aims to participate in an auction for the company, according to a statement today. Raymond Pare, CFO at Couche-Tard, declined to comment.
The third-party offer is “strategic,” Casey’s said, suggesting the bid is from a company that already has a stake in the convenience-store industry. Casey’s owned more than 1,500 stores in the U.S. Midwest as of June 30.
Possible buyers include Sun Capital Partners, a buyout firm based in Boca Raton, Florida, Cerankosky said. The company owns VPS Convenience Store Group, an operator of almost 400 stores in Indiana, Michigan, Ohio, and North and South Carolina.
“They already operate in some states Casey’s has stores in, so it might be a good fit,” Cerankosky said. Sun Capital couldn’t be reached for comment.
Other potential bidders include smaller closely held convenience store chains that have secured financing, said Karen Short, an analyst at New York-based BMO Capital Markets.
“It seems hard to understand why a smaller chain of stores would buy a larger one, but never say never,” Short said.
Couche-Tard last increased its bid for Casey’s Sept. 1. The chain aims to use the purchase to expand in the U.S., where Casey’s has stores in Illinois, Iowa and Missouri. Couche-Tard fell 54 cents to C$23.46 on the Toronto Stock Exchange.
Casey’s also said today that first-quarter earnings, excluding some items, amounted to 81 cents a share. That matched the average estimate of analysts surveyed by Bloomberg.