New Developments in Couche-Tard's Takeover Attempt of Casey's
ANKENY, Iowa and LAVAL, Quebec -- Casey's General Stores Inc. may not be happy with Alimentation Couche-Tard Inc.' s negotiating tactics, but the Iowa-based convenience store chain said it would be willing to sit down and discuss a takeover with its larger, Montreal-based rival if Couche-Tard makes a better offer, according to a report by the Financial Post.
"We are, of course, willing to extend to an interested party the opportunity for discussions regarding a potential consensual transaction, provided that the starting point for such discussions is acceptable," Casey's CEO Robert J. Myers wrote in a letter to Alimentation Couche-Tard's CEO Alain Bouchard.
However, Myers blasted the Canadian corner-store giant's most recent hostile bid of U.S. $38.50 a share as inadequate and "highly conditional," the report stated.
Last week, Casey's revealed that a second suitor -- later confirmed to be convenience behemoth 7-Eleven Inc. -- made an offer of U.S. $40 a share for the company. While Casey's said that bid was also too low, it agreed to sit down and negotiate with Dallas-based 7-Eleven.
Casey's board and management have declined to enter merger talks with Couche-Tard, despite requests from Bouchard. Couche-Tard has been pursuing Casey's for several months, initially making a hostile bid of U.S. $36 a share back in April, according to the report.
With Casey's refusing to come to the table, Couche-Tard is trying to nominate its own, handpicked slate of directors to replace Casey's current eight-member board at the company's annual meeting Sept. 23. Casey's has said it is going ahead with its annual meeting, rejecting a request from Couche-Tard that it be rescheduled.
Yesterday, Couche-Tard issued another open letter to Casey's shareholders. The title read, "Casey's Shareholders -- The Choice is Yours: Do You Prefer the Status Quo or Do You Want Directors Who Are Committed to Maximizing the Value of Your Investment in Casey's? It's Time for a Change -- Vote the Blue Proxy Card Today."
The full text of the letter is below:
September 16, 2010
Dear Casey's General Stores Shareholder:
As a shareholder of Casey's General Stores, Inc. ("Casey's"), you have an important decision to make regarding the future of your investment in Casey's. Next week, Casey's will hold its Annual Meeting of Shareholders, at which you will decide upon a slate of directors who you believe will serve your best interests and maximize the value of your investment in Casey's.
Alimentation Couche-Tard ("Couche-Tard") has spent almost a year attempting to negotiate with your Board a transaction that would provide you with immediate cash value (that's fully-financed) for your investment in Casey's. Over that time, your Board has refused to discuss or meet with us about our offer and has gone to extreme lengths to place obstacles designed to impede not just our offer, but also a sale of Casey's to any party.
As you make your voting decision, we want to set the record straight once-and-for-all and clear up the continual misrepresentations made by the Casey's Board. We urge you to consider the following:
• 7-Eleven has not made a formal offer to acquire Casey's. Unlike Couche-Tard's $38.50 per share fully-financed cash premium offer to acquire all of the outstanding shares of Casey's, 7-Eleven has merely suggested a non-binding indication of interest at $40.00 per share. There is no certainty that 7-Eleven will follow through on its suggestion of a potential transaction between Casey's and 7-Eleven. Furthermore, there is no guarantee that your Board will fulfill its fiduciary obligations to you and maximize the value of your investment in Casey's by pursuing a sale of Casey's to the highest bidder. As a shareholder of Casey's, do you really believe that the Casey's Board will follow through on this process and maximize the value of your investment if its directors are re-elected at the upcoming Annual Meeting?
• Couche-Tard is willing to further increase its offer. Given our strong commitment to an acquisition of Casey's, we have requested to the Casey's Board, both privately and publicly, that Couche-Tard be invited into Casey's sale process. As we have said, if Couche-Tard is granted access into a fair process and has the opportunity to conduct a confirmatory due diligence review of Casey's on the same playing field as 7-Eleven, we would be willing to consider further increasing our offer. Currently, the difference in price between our firm, public offer and 7-Eleven's non-binding preliminary indication of interest is merely 4 percent. Yet, the Casey's Board has authorized discussions to explore a transaction with 7-Eleven whereas they continue to reject our request to be included in the process. As a shareholder of Casey's, don't you want directors who will examine every opportunity to seek the highest value for your investment by giving Couche-Tard, or any other interested party, every opportunity to make an improved offer?
• Couche-Tard's offer is fully financed. Couche-Tard secured up to $1.5 billion in financing, which together with currently available funds, will be more than sufficient to fund the all cash transaction. For the Casey's Board to attempt to use the financing issue as a reason for rejecting our offer is outrageous. Further, as part of its misinformation campaign, your Board claims that the "unusual and extensive level of conditionality" concerns them. The reality is that most of the conditions in our offer are in place because your Board has refused to speak to us or give us any access to conduct due diligence. Should Casey's afford us the opportunity to sit down with the Casey's Board and management, we fully expect most of the conditions to fall away, as they typically do in situations like this. As a shareholder of Casey's, don't you want directors who will engage with a committed buyer like Couche-Tard who has been, and remains, committed to closing a transaction as expeditiously as possible?
• Your board has taken actions contrary to your best interests. Over the past five months, the Casey's Board has gone to extreme lengths to put in place a laundry list of impediments to our premium all-cash offer, including denying Couche-Tard the opportunity to participate in a full and fair process, implementing the leveraged recapitalization plan with an unusual and highly coercive "poison put" feature, conducting expensive and meritless litigation against Couche-Tard, adopting a poison pill and putting in place golden parachute arrangements for executives of Casey's. As a shareholder of Casey's, do you really want to be represented by directors who appear to spend more time in protecting their own jobs, and the jobs of Casey's executive management team, rather than maximizing value for Casey's shareholders?
We continue to firmly believe our offer is attractive for ALL of Casey's constituents. Couche-Tard's track record with employees of companies and with local businesses around the companies that we have acquired is outstanding. Couche-Tard operates using a highly decentralized model, and we expect to keep most, if not all, of the employees of Casey's in place. We also believe access to Couche-Tard's platform will provide the suppliers of Casey's with increased opportunities to expand their sales to convenience store chains within Couche-Tard's portfolio. In the past, Couche-Tard has always been respectful to local businesses around the companies it acquired. Our decentralized model has enabled us to continue the relationships with existing suppliers and vendors. In contrast, in the event of a transaction with 7-Eleven and given 7-Eleven's business model, we believe that the various constituents of Casey's should expect significant changes to the operating environment of Casey's that may be adverse to their interests.
DO YOU TRUST THE EXISTING BOARD TO DO WHAT'S RIGHT FOR SHAREHOLDERS? Casey's shareholders deserve to be represented by directors who are committed to maximizing the value of your investment in Casey's. If Casey's existing directors -- the same directors who have pulled out every stop to prevent a sale of Casey's to any party -- are re-elected to the Casey's Board at the September 23rd Annual Meeting, do you really believe they will do what is in your best interest and maximize the value of your investment by committing to sell Casey's to the highest interested bidder? Can you really trust them to fully explore the non-binding indication of interest by 7-Eleven or any option that would force them to give up control of Casey's?
Couche-Tard's independent nominees are committed to maximizing value for all the Casey's shareholders and if elected, will do whatever is required to accomplish this goal. We urge you to send a clear and strong message by voting the BLUE proxy card that you want directors who will fulfill their obligations to you and serve your best interests, not theirs. The choice is up to you.
Alain Bouchard, President and Chief Executive Officer
In related news, Casey's yesterday released comments on reports issued by two leading proxy advisory services, Institutional Shareholder Services (ISS) and Glass Lewis & Co., regarding Casey's annual meeting of shareholders to be held Sept. 23, 2010.
ISS recommends Casey's shareholders vote "FOR" the reelection of the majority of Casey's director nominees on Casey's WHITE proxy card; while Glass Lewis recommends Casey's shareholders vote "FOR" the reelection of ALL Casey's director nominees.
Casey's CEO Myers said in a statement: "We appreciate that both ISS and Glass Lewis are recommending that shareholders vote on Casey's white card -- and that both proxy advisory services recognize that shareholders should NOT hand over control of this great company to Couche-Tard through a proxy fight. However, we disagree with ISS's withhold recommendation with respect to two of our director nominees. We urge shareholders to vote for ALL of our nominees. Each of our directors has worked diligently to create value for Casey's shareholders, and we stand by our successful track record. In fact, Casey's has delivered to shareholders a cumulative total return of 247 percent from fiscal 2001 through 2010 -- an average annual return of 13 percent."
Myers added: "We have serious concerns that Couche-Tard's nominees will not represent the best interests of all of Casey's shareholders and instead have one purpose -- a quick sale of Casey's to Couche-Tard at a low price to benefit only Couche-Tard shareholders. Further, Couche-Tard's nominees lack the requisite sector experience to support the implementation of Casey's ongoing strategic growth initiatives. At this critical time in Casey's history, we urge shareholders to make the right choice at our upcoming Annual Meeting and reelect Casey's Board in its entirety."