"We have a pretty good understanding of our game plan, and we'll just follow the steps that we need to follow in order to close this transaction," Raymond Pare, vice president and CFO of Couche-Tard, told CSP Daily News yesterday."We still hope that we'll be able to sit with these guys and have a discussion about this transaction," [image-nocss] he added, "and hopefully we'll be able to go through it sooner than later and agree on terms that will be beneficial for the stakeholders of both organizations."
Beyond that, Pare said he was not interested in talking to the media while he and his team concentrate on the job at hand: purchasing Casey's General Stores.
Couche-Tard's public, hostile bid to purchase Casey'sas previously reported in CSP Daily Newsmakes good on rhetoric company officials have repeated frequently during the past few months.
In August, Pare told a group of stock analysts that the company, which had slowed its acquisition pace as the recession set in, was "in a good position and looking at some [acquisition] opportunities."
Pare's presentation led analyst Michael Van Aelst, with Montreal's TD Newcrest, to upgrade its recommendation on Couche-Tard stock and note that the company was well on its way to being at the top of the food chain as the industry enters "a period of 'c-store Darwinism' (i.e., survival of the fittest)."
In late November, more than a month after Couche-Tard had first reached out to Casey's to discuss a possible "partnership," president and CEO Alain Bouchard said on a quarterly earnings call that Couche-Tard was actively working on several acquisition opportunities. "There are acquisition files on our desks now," he said. "We have deposited bids for groups of stores, and we are awaiting feedback from the sellers."
Then on March 9the same day Couche-Tard first submitted its unsolicited, $36-per-share bid to Casey'sPare told The Financial Times, "We have no problem with a quarter like this one," referring to a 23% decline in profit and smaller gasoline margins. "It's just good for the M&A environment.... It's exactly what we did not have in the past two years, that didn't allow us to be able to close good deals."
For their part, analysts largely feel the Casey's chain of convenience storesmore than 1,500 stores mostly in rural areas of nine Midwestern stateswould be a good fit for Couche-Tard. They also said in reports issued since Friday that $36/share is likely too low to get the sale done. "Given the market's reaction to the announcement...the market is suggesting that an offer of at least $40 may be necessary to get the deal done (representing 8.0X Casey's trailing EBITDA)," wrote Van Aelst in a note issued yesterday.
With approximately 52 million shares of stock issued, the proposed deal amounts to about $1.836 billion, a 14% premium over Casey's $31.59 closing price on Thursday; however, since the offer became public, the Iowa-based c-store retailer's shares jumped more than 23% to $39 in midday trading Friday. As CSP Daily News went to press yesterday, Casey's stock hovered around $39/share.As of press time yesterday, 60% of the more than 200 respondents to a CSP Daily News Poll said they expect Couche-Tard will not be successful in its bid to purchase Casey's.Click hereto see what others are saying about the takeover bid.Alimentation Couche-Tard Inc., Laval, Quebec, is the leader in the Canadian c-store industry. 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 covering 43 states and the District of Columbia, and three in Canada covering all 10 provinces.
(Click here for previous CSP Daily News coverage of the Couche-Tard/Casey's situation.)
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.