Casey's Accuses Couche-Tard of Market Manipulation

ANKENY, IOWA -- Casey's General Stores Inc. filed a complaint Friday against Alimentation Couche-Tard Inc. in the United States District Court for the Southern District of Iowa, alleging the Canadian retailer violated federal securities laws in connection with its hostile takeover attempt.

The complaint alleges Couche-Tard engaged in market manipulation in an attempt to acquire all outstanding shares of Casey's stock at an artificially deflated price. As described in Casey's complaint, before Couche-Tard made its offer for Casey's public April 9, it had accumulated a stake of 1,975,362 Casey's shares, representing approximately 3.9 percent of those issued. Following its announcement of the offer, Couche-Tard sold almost all of its shares for $38.43 per share, which represented 17 percent of the total trading volume for Casey's stock during market hours that day.

The complaint alleges that with Couche-Tard's announcement of its intent to takeover Casey's, and then selling its shares on the open market, the Canadian convenience store company "simultaneously reaped millions of dollars of profit by trading on the market's reaction to its own announcement, and artificially depressed the run up in Casey's stock price that otherwise would have followed Couche-Tard's announcement of its takeover bid."

In response, Couche-Tard issued a statement saying: "We believe this lawsuit is entirely without merit and we will vigorously defend against these baseless claims. We are disappointed that the Casey's board of directors has chosen to proceed down this path, which we believe is designed to distract Casey's shareholders from focusing on the real issue -- our all cash, premium bid for Casey's."
It continued: "We believe our offer price represents full and fair value for Casey's. Our tender offer was commenced to allow the Casey's shareholders to decide if they wish to accept an immediate premium in cash, and thereby avoid any uncertainty with respect to the future stock performance of Casey's, a decision that the Casey's board seeks to deny its shareholders. We are committed to making this combination a reality as evidenced by the commencement of our tender offer and nomination of a slate of directors for election to the Casey's board of directors."

Earlier this month, Couche-Tard brought a $36-per-share tender offer to shareholders of Casey's, which Casey's board of directors recommended that shareholders reject the offer, as it substantially undervalues the convenience store chain, Casey's stated.

As part of the complaint, Casey's is seeking:

-- a declaration that Couche-Tard's sale of Casey's stock with the intent to artificially depress the market price was in violation of Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder;
-- a declaration that Couche-Tard's announcement of its intention to make a tender offer for Casey's shares without disclosing that it held nearly 2 million shares and intended to sell them after the announcement, in order to reap illicit profits and to artificially depress the market price of Casey's stock, was in violation of Section 14(e) of the Exchange Act, and Rule 14e-8 promulgated thereunder;
-- an injunction preventing Couche-Tard from taking further steps to consummate the tender offer and from purchasing shares of Casey's

Cravath, Swaine & Moore LLP and Ahlers & Cooney PC are providing legal advice to Casey's, and Goldman, Sachs & Co. is acting as financial advisor.

Related News:

WSJ on Couche-Tard Takeover Tactics

Casey's Urges Rejection of Couche-Tard Tender Offer

Couche-Tard Details Nominees for Casey's Board

Couche-Tard Execs Provide Insight Into Casey's General Offer
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