Casey's Likely To Remain Independent After Fending Off Couche-Tard Takeover

With a hostile takeover by Alimentation Couche-Tard Inc. out of the picture, Casey's General Stores Inc., based in Ankeny, Iowa, may remain independent, despite its ongoing talks with Dallas-based 7-Eleven Inc.

"It could always lead to some sort of transaction, but I think it's more likely that they'll continue as an independent company," Ben Brownlow, vice president of equity research for Morgan Keegan and Co. in Memphis, told the Des Moines Register on the $40-pershare bid for Casey's by 7-Eleven.

Bill Walljasper, chief financial officer for Casey's, told the Register the convenience store chain now is in "an exchange of information" with 7-Eleven and that no decision is imminent. But "I wouldn't look for this to be a long, drawn-out situation," Walljasper said.

Couche-Tard walked away after its slate of director nominees was rejected by shareholders at Casey's annual meeting last month. Its $38.50-per-share bid was deemed too low by Casey's to engage in negotiations.

"My view is that shareholders voted for the current management not because they thought a $40 bid was going to go through with 7-Eleven, but because they supported the thought process management had that even at $40, the company is undervalued," Brownlow said in the report.

Brownlow noted Casey's stock should remain healthy even if 7-Eleven's interest fades, thanks to Casey's aggressive expansion plans, combined with its recent repurchase of 13.2 million shares, which have increased shareholder value.

Meanwhile, Laval, Quebec-based Couche-Tard, which allowed its tender offer for Casey's to expire on Sept. 30, moved ahead with a small acquisition. The Canadian retailer's Mac's Convenience Stores subsidiary signed an agreement to acquire 12 stores in the Indianapolis area from Crystal Flash Petroleum LLC.

The stores, which offer motor fuels and operate under the "Crystal Flash" banner, would be operated by Couche-Tard's Midwest Division under the Circle K brand. Under the agreement, Couche-Tard would buy the land and buildings for one location and would assume or enter into leases for the remaining locations.

"Subsequent to this transaction, our network in the Circle K Midwest Division would include a total of 471 company-operated-stores. These stores are located on highly visible and well-traveled roads and occupy strategic locations within their respective trade areas. Strategically, this acquisition would be a complement to our expansion and growth plans for the Midwest Division. These stores would be an excellent fit within our existing Indianapolis market area." Darrell Davis, vice president operations, Midwest Division of Circle K, said in a statement.