Couche-Tard Not Expected to Renew Bid for Casey's

MONTREAL -- Alimentation Couche-Tard Inc. is not expected to rekindle its interest in Casey's General Stores now that the Iowa-based convenience store chain has broken off talks with Texas-based 7-Eleven Inc., analysts who have been following the saga told The Canadian Press.

As reported by CSNews Online, both Casey's and 7-Eleven confirmed Wednesday that talks had ended. Amid weeks of negotiations, 7-Eleven increased its cash offer by $3 per share to $43. That's compared to $38.50 per share that had been offered by Couche-Tard.

Couche-Tard, Canada's largest convenience store chain, threw in the towel Sept. 30, following a bruising six-month battle to acquire Casey's for $2 billion, the report noted.

Ben Brownlow, a Casey's analyst with Morgan, Keegan and Co., told The Canadian Press he wasn't surprised by Casey's rejection and doesn't believe Quebec-based Couche-Tard will stray from its disciplined acquisition strategy to top 7-Eleven's failed bid.

"The (Casey's) board and a majority of shareholders believe that the shares are worth north of $43, and I wouldn't expect Couche-Tard to pay that high a price," Brownlow said.

In fact, he said he believes the cost of 7-Eleven's offer was $45 per share when considering the $100 million in penalties associated with Casey's recapitalization. That's about the 12-month share price target of analysts, according to the report.

Irene Nattel, an analyst with Desjardins Securities, said Casey's rejection of $43 sends a clear message to other potential bidders that the board is unlikely to support any price below mid-$40s. "At this point, it looks as though Casey's will remain an independent, publicly traded company -- which is fine from our perspective," Nattel wrote in a report.

She had previously speculated that Couche-Tard could eventually mount a new challenge for Casey's once 7-Eleven walked away. Nattel said Casey's remains the "blue chip" among convenience store operators with robust gas and foodservice margins despite a sluggish economy. Casey's also announced Wednesday its intent to purchase up to 44 stores in three Midwest states, marking a 4-percent increase in its network size in the past month.

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