ANKENY, Iowa — Casey's General Stores Inc. is growing its reach in key Midwest markets with an agreement to acquire Buchanan Energy, owner of Bucky's Convenience Stores, in an all-cash transaction for $580 million.
The purchase price includes tax benefits valued at $80 million for a net after-tax purchase price of $500 million.
Omaha, Neb.-based Buchanan Energy and Bucky's Convenience Stores were founded as a family-owned and -operated business in 1980. It operates convenience stores primarily in Illinois and Nebraska.
The transaction will include 94 retail stores and 79 dealer locations, as well as multiple parcels of real estate for future new store construction, which will increase Ankeny-based Casey's footprint to more than 2,300 stores.
According to Casey's, the deal will enhance its presence in these attractive markets and enables the company to bring its offerings to a broader group of consumers.
The transaction will also include a dealer network of stores where Casey's will manage fuel supply agreements to these stores. This new capability will give the company future flexibility with respect to mergers and acquisitions as well as a new income stream while leveraging its scale for fuel procurement.
"In January of this year, we outlined our business strategy to achieve top-quintile EBITDA growth and deliver on our purpose 'to make life better for communities and guests every day,'" said Darren Rebelez, president and CEO of Casey's. "We've been hard at work executing on our strategic vision to reinvent the guest experience; creating efficiencies to improve the shape of our business and to fund future growth; and accelerating our new store builds and acquisitions. Adding Bucky's to the Casey's family is aligned with our strategy."
Steve Buchanan, founder and president of Buchanan Energy and Bucky's, highlighted the strategic alignment between the two c-store organizations.
"The acquisition by Casey's is an exciting milestone in our 40-year history, and I am pleased that Bucky's will join a top convenience retailer for its next chapter. The addition of Casey's pizza to our existing high-volume stores will be celebrated by our customers, and our shared Midwestern roots and community values are aligned as we continue to serve our loyal customers," he said.
The transaction is expected to close by the end of 2020, subject to customary closing conditions and regulatory approval.
"We anticipate that the acquisition will create compelling value for Casey's shareholders in the near- and long-term, and it will quickly be accretive to Casey's EBITDA and earnings per share. This is an exciting time for Casey's, and we look forward to welcoming the Bucky's team," Rebelez added.
The company will finance the transaction with a combination of cash on hand, revolver capacity and bank financing. The net investment of $500 million represents a multiple of 10.6 times Bucky's last 12 months of EBITDA. The company expects to achieve $23 million in annual synergies by the third year.
Casey's was advised by Goldman Sachs & Co. LLC and Husch Blackwell. Buchanan Energy used BofA Securities Inc. as their financial advisor and McGrath North Mullin & Kratz PC LLO as their legal advisor.