7-Eleven, Casey's Confirm End of Discussions
DALLAS & ANKENY, Iowa -- Both 7-Eleven Inc. and Casey's General Stores Inc. confirmed yesterday that discussions regarding a potential transaction have ended.
7-Eleven made a preliminary proposal of $40.00 per common share for a consensual transaction on Sept. 2. After completing additional due diligence, 7-Eleven raised its offer to $43.00 per common share. 7-Eleven said it believes the revised proposal fairly values Casey's.
Casey's leadership, however, disagreed. In a statement released yesterday, the company said its "Board of Directors, in consultation with its financial and other advisors, carefully considered the revised proposal and unanimously determined that the revised proposal does not reflect the value of Casey's and its significant growth opportunities, and is not in the best interests of Casey's, its shareholders and other constituencies. Given that Casey's and 7-Eleven have been unable to reach mutually agreeable terms, the companies are no longer in discussions."
In its own statement, 7-Eleven President and CEO Joe DePinto said despite talks ending with Casey's, the retailer's strategy is to grow aggressively in the U.S. and Canada. "We will continue to pursue transactions that make sense for our company to maximize shareholder value," he stated. "Expanding our store base enables us to further leverage our merchandising expertise, proprietary distribution network, and scale in order to provide more convenience to our customers."
The U.S. convenience store industry is highly fragmented with the majority of the industry comprised of small chains or independent owners. As consolidation in the convenience store industry has increased, 7-Eleven said it has ramped up its merger and acquisition efforts, closing several deals in 2010. In addition, the chain is focused on its Business Conversion Program (BCP), a conversion of existing convenience stores to the 7-Eleven brand, and organic growth.
"7-Eleven has the size, scale and financial flexibility to aggressively increase its store base over the next several years," Stan Reynolds, 7-Eleven's executive vice president and CFO, said in a statement. "We have a strong balance sheet, solid operating results and the resources to add significantly to our asset base. We intend to grow, while maintaining a disciplined investment approach and a conservative capital structure."
7-Eleven said it expects to add 300-plus stores by the end of this year in the U.S. and Canada. The company operates, franchises or licenses more than 8,200 stores in North America.