Couche-Tard Bows Out

Casey's refusal to negotiate finally forces hostile bidder to throw in towel

Steve Holtz, Editor in Chief, CSP Daily News

ANKENY, Iowa & LAVAL, Quebec -- Alimentation Couche-Tard Inc. allowed its tender offer to acquire all of the outstanding shares of Casey's General Stores Inc. for $38.50 per share in cash to expire yesterday, essentially bowing out of its hostile takeover effort.

"From the beginning of this process, Couche-Tard demonstrated the seriousness of its interest in acquiring Casey's, and we continue to believe that our fully financed, $38.50-per-share cash tender offer was the most attractive strategic alternative available to shareholders of Casey's," stated Couche-Tard president [image-nocss] and CEO Alain Bouchard. "However, we have decided not to continue to pursue our offer given the Casey's board's repeated refusal to negotiate with us."

He added, "Couche-Tard approached this opportunity in a disciplined manner and our basic premise is always that a transaction must create value for our shareholders. We look forward to building upon our outstanding track record of delivering growth and value to our shareholders."

At the expiration of the offer, certain conditions to the offer had not been satisfied and Couche-Tard had not waived those conditions, a Morgan Keegan/CSP Daily News Flash reported yesterday.No shares of common stock of Casey's were purchased by Couche-Tard pursuant to the offer, and all tendered shares will be returned promptly, according to a company statement.

The announcement came a day after Casey's unveiled in a filing with the U.S. Securities & Exchange Commission (SEC) the final voting results from shareholders, underscoring the overwhelming support Casey's sitting board of directors has from shareholders.

"Our shareholders overwhelmingly have reelected all eight standing members of the board of directors," Casey's president and CEO Robert Myers said during the shareholder meeting September 24, citing preliminary vote totals.Final vote tallies, released Wednesday, show shareholders voted more than 10 to 1 in favor of the sitting board over an alternate slate nominated by Couche-Tard.Vote results:

Nominees of Casey's

Nominees of Alimentation Couche-Tard Inc.

Similarly, shareholders overwhelmingly rejected Couche-Tard's effort to repeal any bylaw amendments made by the board of directors without first consulting shareholders after June 10, 2009. The proposal aimed to reverse a "poison pill" rights plan adopted by Casey's management to repel Couche-Tard's advances. Nearly 6.2 million shareholders voted in favor of the repeal; more than 34 million voted against it.

Couche-Tard initially offered $36 per share to buy Casey's in April, effectively valuing the company at about $2 billion. It subsequently increased its offer to $36.75 and then $38.50, a bid that expired at 5 p.m. EST yesterday.In early September, Dallas-based 7-Eleven Inc. stepped into the fray, offering $40 per share for Casey's, although no formal offer has been made public.As a result, Irene Nattel, analyst with RBC Capital Markets, speculated to the Financial Times, "Unless Couche-Tard raises its offer to at least the $40 range, it is difficult to see how Couche-Tard can be part of the current process. But for Couche-Tard, at prices in the $40-plus range, return calculations start to erode, and we would view a Couche-Tard offer well in excess of $40 as somewhat unlikely."

(Click here for previous CSP Daily News coverage of Casey's and Couche-Tard.)

Laval, Quebec-based Couche-Tard operates a network of 5,878 c-stores, 4,141 of which include motor fuels dispensinglocated in 11 large geographic markets, including eight in the United States (operating primarily under the Circle K name) covering 43 states and the District of Columbia, and three in Canada (operating primarily under the Mac's and Couche-Tard names) covering all 10 provinces.

As of June 30, 2010, Ankeny, Iowa-based Casey's has 1,531 stores in nine Midwestern states, primarily Iowa, Missouri and Illinois.

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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