Japan's 7-Eleven in Talks to Buy Casey's to Expand in U.S.
7-Eleven in Talks to Buy Casey’s General to Expand in U.S.
Daniel Acker/Bloomberg
The 7-Eleven offer may prompt a bidding war for Casey’s more than 1,500 stores throughout the U.S. Midwest.
The 7-Eleven offer may prompt a bidding war for Casey’s more than 1,500 stores throughout the U.S. Midwest. Photographer: Daniel Acker/Bloomberg
7-Eleven Inc., the biggest U.S. convenience-store chain, is in talks to acquire rival Casey’s General Stores Inc. for $40 a share.
Casey’s yesterday confirmed the offer by 7-Eleven, a unit of Tokyo-based Seven & I Holdings Co., which beats a $38.50 bid from Alimentation Couche-Tard Inc. The bid is about 9 percent less than the $43.95 price for Ankeny, Iowa- based Casey’s shares yesterday at 4 p.m. New York time in Nasdaq Stock Market trading. Seven & I spokesman Minoru Matsumoto declined to comment today.
The Japanese retailer’s attempt to expand 7-Eleven’s 6,389 convenience-store chain in North America by acquiring Casey’s comes as surge in the yen and stagnant consumer spending at home have boosted the appeal of investing in growth outside the country. Aeon Co., Japan’s second-largest retailer, is among potential buyers for Carrefour SA’s Southeast Asian units, three people with knowledge of the matter said.
“Japanese retailers must search for new opportunities abroad as consumer spending will remain weak in their home market,” said Koichi Ogawa, chief portfolio manager at Tokyo-based Daiwa SB Investments Ltd., which oversees about $53 billion in assets. “It’s smart to spend money in countries like the U.S. where the population is growing.”
The 7-Eleven offer may prompt a bidding war for Casey’s more than 1,500 stores throughout the U.S. Midwest. Couche- Tard has sought to buy Casey’s for the past five months, raising its bid twice in an effort to sway the board.
Share Performance
Seven & I rose 2.4 percent to 2,010 yen at the 3 p.m. close on the Tokyo Stock Exchange. Couche-Tard, based in Laval, Quebec, yesterday fell 14 cents to C$23.05 in Toronto Stock Exchange trading.
Casey’s board determined that the company’s value exceeds $40 a share and authorized discussions with 7-Eleven to “explore whether a transaction can be reached that reflects the true value of Casey’s,” according to the statement. Goldman Sachs Group Inc. is advising Casey’s, according to the statement.
The offer is an all-cash deal, fully financed, valued at more than $2 billion, people with knowledge of the talks said earlier this week.
A stronger yen, which this week reached a 15 year-high against the dollar, makes overseas acquisitions cheaper in local currency terms for Japanese companies.
Seven & I’s North American operating income gained 9.6 percent last fiscal year excluding currency movements, compared with a 12 percent decline in its Japanese business. Seven & I, which generates 87 percent of earnings in Japan, has been closing stores in its home market amid a shrinking population and stagnant economic growth.
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 said Sept. 7 it was pleased Casey’s is considering a possible sale, and that it aims to participate in an auction for the company.
7-Eleven became a wholly owned unit of Seven & I after the Japanese retailer bought the 27 percent of 7-Eleven Inc. it didn’t own in 2005.
To contact the reporters on this story: Greg Chang at gchang1@bloomberg.net; Alex Sherman in New York at asherman6@bloomberg.net; Naoko Fujimura in Tokyo at nfujimura@bloomberg.net
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