"Though it remains our strong preference to enter into a negotiated transaction with Casey's, we are committed to pursuing a combination of our two companies," Couche-Tard president and CEO Alain Bouchard said in a statement [image-nocss] yesterday. "We are confident that these nominees will serve in the best interests of Casey's and its shareholders."
For its part, Casey's reserved judgment, as required by law. "Casey's board will evaluate Couche-Tard's submission and candidates consistent with the company's bylaws," it stated in its brief response to Couche-Tard action.
Neither Couche-Tard nor Casey's executives were taking calls from the press yesterday.
The nine nominated directors, as reported in a Morgan Keegan/CSP Daily News Flash yesterday, proposed by Couche-Tard are:
Howard W. Bates, who serves on several boards of directors and supports many charitable organizations. Jeffrey N. Brown, chief executive officer of Home News Enterprises LLC. Hugh L. Cooley, who retired from Shell Oil Products US in July 2009. G. Terrence Coriden, counsel for Dugan & Voland LLP and a founder of Coriden Law Office LLC. Mickey Kim, chief operating officer of Kirr, Marbach & Co. LLC. David O. Mann, co-founder and general partner of Spring Mill Venture Partners LLC. Kevin J. Martin, chief financial officer of Johnson Ventures Inc. David B. McKinney, president and chief compliance officer for Reams Asset Management Co. Marc E. Rothbart, chief financial officer and senior vice president of SIHO Insurance Services Inc. Calls by CSP Daily News to about half the nominees were not returned by press time yesterday. The slate has a decidedly Couche-Tard bent, as most of the candidates are based in or around Columbus, Ind., home to the headquarters of its Circle K Midwest region. Casey's has 63 stores in Indiana.
On April 9, Couche-Tard publically announced its intention to pursue acquisition of Casey's General Stores. Calling Couche-Tard's $1.9 billion offer an "opportunistic proposal" and part of an effort to "acquire U.S. companies on the cheap," Casey's executives have refused to negotiate with Couche-Tard. (Click here for previous CSP Daily News coverage.)
To force the issue, Couche-Tard announced a stock tender on June 2, opening the door for the company to talk with Casey's stockholders themselves. At that time, Couche-Tard also said it would establish a slate of Board of Director candidates if Casey's officials continued to block the buyout effort.
"We want to buy Casey's, and it's a great fit for our geography," Couche-Tard president and CEO Alain Bouchard told CSP Daily News this past week. "We think we can add value to Casey's stores and we can duplicate the Casey's model in our rural stores, certainly with their foodservice model. It's a very,very well-managed company and that's why we insist and we want to buy."
About the slate of candidates, Couche-Tard CFO Raymond Pare told CSP Daily News, "It's well-respected business people in the Midwest, and they [will make decisions as] independents. We'll propose them, but [their task will be to] work in the best interest of the Casey's shareholders."
Couche-Tard also intends to seek to repeal any new by-laws or amendments to Casey's by-laws adopted by its Board of Directors, without shareholder approval, after June 10, 2009 (which is the date of the last publicly disclosed amendment to Casey's by-laws).
Couche-Tard's tender offer aims to acquire all of the outstanding shares of common stock of Casey's for $36.00 per share in cash. The all-cash offer represents a 14% premium over the closing price of $31.59 per share of Casey's on April 8, 2010, the last trading day prior to the public disclosure of Couche-Tard's proposal, a 17% premium over the 90-calendar day average closing share price of Casey's as of April 8, 2010, and a 24% premium over the one-year average closing share price of Casey's as of April 8, 2010. Casey's stock was trading at about $35.50/share yesterday afternoon.
The offer also implies a last 12 months (as of Jan. 31, 2010) EBITDA multiple of 7.4x and a price of $1.3 million per store, which, according to Couche-Tard, compares favorably to corresponding metrics of publicly traded companies and precedent transactions in the convenience store industry. The transaction has a total enterprise value of approximately $1.9 billion on a fully diluted basis, including net debt of Casey's of approximately $29 million.
The tender offer is scheduled to expire at midnight on Friday, July 9, 2010, unless extended.
The slate of candidates to the Casey's Board of Directors will be voted on by shareholders during Casey's 2010 annual meeting, which is expected to be held in September.
Goldman, Sachs & Co. is acting as financial advisor to Casey's, and Cravath, Swaine & Moore LLP and Ahlers & Cooney, PC are providing legal advice.
Credit Suisse Securities LLC is acting as financial advisor to Couche-Tard and dealer manager for Couche-Tard's offer, and Dewey & LeBoeuf LLP is acting as legal counsel. Innisfree M&A Incorporated is acting as information agent for Couche-Tard's offer.
Couche-Tard, Laval, Quebec, is the leader in the Canadian convenience store industry. In North America, Couche-Tard operates a network of 5,883 c-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, based in Ankeny, Iowa, has 1,513 corporate stores in nine states.
Click hereto see what others are saying about the takeover bid.
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