Couche-Tard Gets 'Hostile' '

A "disappointed" Casey's CEO rejects $36/share offer for third time

Steve Holtz, Editor in Chief, CSP Daily News

LAVAL, Quebec & ANKENY, Iowa -- After almost six months of mostly one-way talks and two identical offers, Alimentation Couche-Tard Inc. took its effort to purchase the Casey's General Stores Inc. convenience store chain public on Friday, hoping to force the company's hand. The result: No sale, as reported in two Morgan Keegan/CSP Daily News Flashes on Friday.

"We strongly believe that our $36 per share all-cash proposal is compelling for Casey's shareholders," said Alain Bouchard, president and CEO of Couche-Tard in publicly announcing the takeover bid, "as [image-nocss] it offers them the opportunity to realize full and immediate value for their investment."

Casey's president and CEO Robert J. Myers quickly countered on Friday, "Your proposal significantly undervalues Casey's and is not in the best interests of the corporation," reiterating a strong opinion he had shared earlier with Couche-Tard after its first two $36/share offers.

Stopping short of calling Couche-Tard's offer insulting, Bill Walljasper, senior vice president and CFO for Casey's, said the company's management and board took the offer "very seriously."

"That's why we evaluated the offer," he told CSP Daily News. "But as we indicated, this [offer] significantly undervalues the company. The shareholders that I've spoken with have that same feeling as well."

The saga began in October, when Couche-Tard "made an inquiry with regards to a partnership," said Walljasper, "at which point, our CEO indicated that we believe we have a very good strategic plan that has been working for us, and we believe it's going to continue to work for us and add shareholder value."

Then came the first unsolicited offer of $36/share on March 9. "The board and the senior management convened to evaluate it," Walljasper said. "We gave it prudent consideration and looked at it in relationship to our strategic plan and [concluded that the offer] significantly undervalued the company."

That reply was sent March 22, and within the same week, Couche-Tard "came back to us with the same offer, basically stating that we should reconsider and that this was in [our] best interests. [At that time, they] indicated that they were willing to go public with this."

Casey's repeated its response on March 29 and heard nothing from Couche-Tard until the press release was issued this past week.

"We were confident it [a press release] was going to come at some point, we just didn't know when," Walljasper said.

The press release was sent via "crisis communication firm" Wilkinson Brimmer Katcher, which typically steps in to aid companies in times of financial hardship or legal battles.

Bouchard doesn't mince words in the press release, which includes a correspondence to the Casey's board sent via Myers. "Despite our repeated efforts starting in October 2009 to engage in negotiations, and without the benefit of discussing our proposal with us or our advisors, your board of directors unanimously rejected our proposal," Bouchard said. "Our goal remains to work with you to agree to a negotiated transaction; however, due to your unwillingness to engage in discussions and the unique opportunity presented by our proposal for your shareholders to realize full and immediate value, we are compelled to make this proposal known to your shareholders."

He added, "We believe that a combination of Casey's and Alimentation Couche-Tard Inc. presents an exciting opportunity to create significant value for our respective shareholders, employees, business partners and other constituencies."

Myer's response was equally direct. "We are very disappointed that you have decided to launch a hostile public campaign regarding your unsolicited proposal to acquire Casey's," he wrote.

Walljasper, who said he wasn't surprised when Couche-Tard first approached Casey's in October, speculated that there is a clear reason why the Canadian company is intent on purchasing Casey's.

"They don't have a presence in the Midwestern area, and maybe that's partly because of our presence," he said. "They grow their business by acquisitions not organic [development], typically. They probably saw this as an opportunity to fill a void in their geography."

A spokesperson for Wilkinson Brimmer Katcher told CSP Daily News that Couche-Tard executives currently are not conducting interviews with the media.

Casey's owns and operates more than 1,500 c-stores in nine Midwestern states: Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin.Couche-Tard currently operates a network of 5,883 c-stores, 4,142 of which include motor fuel dispensing, located in 11 large geographic markets, including eight in the United States under the Circle K banner covering 43 states and the District of Columbia, and three in Canada under the Mac's banner covering all 10 provinces.For a look at the financials around the proposal, see related story in this issue of CSP Daily News.

Click hereto discuss this takeover bid.

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