Casey's General Stores Inc. sent a letter to its shareholders last month, urging them to reelect the company's current board during its annual meeting of shareholders to be held Sept. 23, 2010.
The company nominated all of Casey's directors for reelection at the annual meeting. The letter, from Casey's President and Chief Executive Officer Robert J. Myers, said the directors have "a superb track record of delivering value to shareholders," and shareholders' votes are "very important at this pivotal time in the company's history."
Earlier this year, Laval, Quebec-based Alimentation Couche-Tard Inc. revealed a full slate of nominees for election as independent directors to Casey's board, as part of its hostile takeover attempt of Casey's. As of press time, Couche-Tard had a tender offer available to shareholders for $36.75 per share, which Casey's repeatedly called undervalued.
Myers goes on to state that Casey's believes Couche-Tard's nomination plans are "simply an attempt to advance its inadequate, unsolicited offer for Casey's." The executive also said: "We believe Couche-Tard's nomination of an opposition slate is solely an attempt by Couche-Tard to advance its proposal for a business combination with Casey's."
Myers also touched on another company initiative to buy back approximately 25 percent of Casey's outstanding shares at a price of $38 to $40 per share, through a $500 million recapitalization plan. He wrote to shareholders that the company's performance and strategic growth initiatives will deliver "far greater value than Couche-Tard's lowball offer. This value creation will be further enhanced by our highly accretive recapitalization plan."
In response, Couche-Tard issued a statement regarding Casey's completion of a private placement of $569 million to execute the recapitalization plan, saying the plan to "transfer value from the Casey's shareholders to note-holders is outrageous." It goes on to claim that it contains a so-called "poison put" feature in favor of the note-holders that would allegedly entrench the Casey's board and management. "The financing makes it almost $2 per share more expensive to acquire Casey's â that is $2 that could have gone to the shareholders but instead is designated for note-holders in the event of any such acquisition," Couche-Tard said in a statement.
According to Couche-Tard, the terms also require Casey's to pay note-holders approximately $95 million in penalties if the Casey's shareholders decide to replace a majority of the Casey's board. "The Casey's board and management are trying to take the decision regarding the future of the company away from the Casey's shareholders by putting this expensive âpoison put' in place," the company stated.
Couche-Tard goes on to state that Casey's has had more than 10 months to consider alternatives to maximize value for all Casey's shareholders, and it believes the recapitalization plan is a signal that there are no other buyers for Casey's at a price exceeding Couche-Tard's $36.75 per share offer.