The most recent suit, filed last week in Iowa, is a class-action petition by the Kentucky State District Council of Carpenters Pension Trust Fund. It alleges Casey's board members breached their fiduciary duty to shareholders though "disproportionate, draconian and preclusive defensive measures" [image-nocss] that have hurt investors.
"The board's refusal to negotiate in good faith and present the company's shareholders an opportunity to fairly consider Couche-Tard's offer is causing substantial harm to Casey's shareholders," the suit said. "These [individual directors] have demonstrated a course of action consistent only with their self-serving motivesnamely creating barriers to a change of control in order to ensure that they will retain their prestigious and lucrative positions with the company."
The Carpenters Pension Trust alleges that instead of engaging in talks with Couche-Tard, the board of Casey's created a number of roadblocks to ward off the Canadian company's approaches. Chief among them was a so-called "poison pill" shareholder rights agreement adopted in April. Under the agreement, once any single shareholder amasses a 15% stake in Casey's, all other shareholders except the acquiring investor would have the right to purchase new stock in the company at half the market price.
The Pension Trust also takes issue with Casey's 10-cent dividend announced on June 15, saying it is out of line with previous dividends and "designed to make the company less attractive to potential suitors by reducing its cash on hand." And it blasts amended employment agreements Casey's struck May 27 and June 1 with certain executives.
The legal action is one of three suits filed against Casey's related to Couche-Tard, said the report. The others, also class-action complaints, assert claims for breach of fiduciary duty. One seeks an order requiring the Casey's board to put the company up for auction. The other seeks an order requiring the board to evaluate other deals.
Casey's said it believes all the claims are without merit and that it intends to defend itself against them. None of the allegations have been proven, the report added.
After receiving an opinion by advisers Goldman Sachs & Co., Casey's board on Wednesday unanimously rejected Couche-Tard's latest offer of $36.75 a share, saying it undervalues the company. Casey's said it would buy back about one quarter of its stock for between $38 and $40 a share in a move to increase value for shareholders.
"[They found] a big bat" to stave off suitors, RBC Capital Markets analyst Irene Nattel wrote in a research note cited by the Financial Post. "The next move must come from [Couche-Tard]: Walk away or raise the offer to above $38 US to $40."
Couche-Tard executives have met with several large Casey's shareholders in recent weeks to solicit their support for formal negotiations between the two companies. One of those shareholders, New York City-based Clear-Bridge Advisors, has said the Casey's board's intransigence discourages a higher offer.
Laval, Quebec-based Couche-Tard operates a network of 5,883 convenience stores located in 11 large geographic markets, including eight in the United States covering 43 states and the District of Columbia, and three in Canada covering all 10 provinces.
Casey's General Stores, based in Ankeny, Iowa, has 1,513 corporate stores in nine states.
(Click here for previous CSP Daily News coverage of the Casey's/Couche-Tard saga.)
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