Couche-Tard Boosts Bid For Casey's
"We feel our branding is well established in our markets, and now we're going to be customer driven. And that's the way it should be."
Scott Shakepeare, Maverik (page 30)
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Casey's General advised shareholders to reject the improved offer, calling it undervalued and not in its best interest.
Alimentation Couche-Tard Inc. sweetened its bid last month in its hostile takeover attempt of Ankeny, Iowa-based Casey's General Stores Inc., upping its per-share tender offer to shareholders 75 cents, to $36.75 per share in cash.
The revised transaction has a total value of approximately $1.9 billion, including Casey's net debt of approximately $28 million, the Laval, Quebec-based retailer stated.
"We continue to firmly believe that a combination of Couche-Tard and Casey's is in the best interests of the shareholders and other constituencies of both Casey's and Couche-Tard," said Alain Bouchard, president and CEO of Couche-Tard. "Our increased $36.75 per share cash offer is well above the value that Casey's, on its own and in any reasonable timeframe, could deliver to its shareholders and allows the shareholders of Casey's to receive a significant cash premium for their investment."
Responding to the offer, Casey's advised its shareholders to reject the offer, saying it "substantially undervalues" the company and is not in shareholders' or the company's best interest. On June 8, Casey's also rejected the initial tender offer, and recommended shareholders not tender their shares.
The new offer represents a 26-percent premium over the one-year average closing share price as of April 8, 2010, according to Couche-Tard. It also implies a last 12 months (as of April 30, 2010) EBITDA multiple of 7.2 times and a price of $1.25 million per store.
Karen Short, analyst at BMO Capital Markets, said in published reports Couche-Tard's previously announced extension of the tender offer indicates the company is still interested in acquiring Casey's, but a higher bid will be needed to begin negotiations, especially as only 19 percent of Casey's shareholders tendered their shares as of the initial deadline.
"Couche-Tard has zero control," she said in reports, adding Casey's isn't "overly obligated" to do anything given the low support for the bid.
Martin Landry, analyst at Desjardins Securities, said in a note that he wouldn't be surprised to see Couche-Tard raise its bid to gain additional support, but added "the low number of shares tendered implies that both parties are still a long way from a transaction."
Couche-Tard's increased tender offer is scheduled to expire at 5 p.m. EST, Friday, Aug. 30, 2010, unless further extended.