LAVAL, Quebec -- Alimentation Couche-Tard Inc.'s five-month battle to acquire Casey's General Stores Inc. and become North America's largest convenience store company could be dealt a fatal blow today, said the Canadian Press. Shareholders of the Ankeny, Iowa-based company today cast their votes to elect directors to its board.
Couche-Tard's $2 billion hostile bid for Casey's expires September 30. But a rejection of its slate of director nominees could effectively end Couche-Tard's efforts, industry analysts said.
"It's key," Ben Brownlow, an analyst with Morgan, Keegan & Co., Memphis, Tenn., told the news agency. "This is the last key step that Couche-Tard could take to try to take over Casey's. If they get a few board members in, I think that gets their foot in the door."
Casey's entered into talks with Dallas-based 7-Eleven Inc. after it gave a preliminary $40 per share offer. Couche-Tard said it would increase its own bid if Casey's adopted a fair process and gave it access to the company's books.
Failure to elect board members puts additional pressure on the Montreal-area retail operator to increase its US$38.50 per share bid. But Brownlow doubts it would match 7-Eleven.
"It wouldn't surprise me if they raised the bid but based upon their prior comments and their actions I wouldn't expect them to do so."
The takeover battle between Laval, Quebec-based Couche-Tard and Ankeny, Iowa-based Casey's has been marked by intense acrimony, with each side launching lawsuits and accusing the other of misrepresentations and distortions. Couche-Tard suggested the late entry of 7-Eleven was a smokescreen since details of the negotiations won't be disclosed ahead of Thursday's vote.
Brownlow said he thinks that Casey's will decide to continue operating as a standalone business unless it receives an offer above $40.
Another industry observer agreed that it is looking increasingly unlikely that Couche-Tard will prevail. "If they are unable to elect anybody on the board, it's unlikely that Casey's shareholders will tender their shares given the price that Couche-Tard's offering," he told CSP on condition of anonymity.
Even though it increased its offer three times from an original bid of $36, the analyst said Couche-Tard had a chance until 7-Eleven entered the picture and prompted Casey's shares to surge at one point to nearly $45. "The fact that 7-Eleven came around really screwed things up," the analyst said.
(Click here for previous CSP Daily News coverage of Casey's and Couche-Tard.)
A CSP Daily News Poll yesterday asked, "What do you think will be the ultimate result of Casey's shareholder meeting tomorrow?"
Of the approximately 150 responses, more than 40% said, "7-Eleven will be closer to purchasing some or all of the company. Nearly 30% said, "All buyout bids will be dead." Almost 24% said, "Couche-Tard will be closer to purchasing some or all of the company. " And a little more than 7% said, "Other."
Readers of CSP Daily News have also started to weigh in with comments on yesterday's editorial by CSP's Mitch Morrison concerning what will happen to Casey's (click here to read the editorial):
It appears that Casey's has a "boy's club" going on with their directors. Strange that none of them have had the intestinal fortitude to challenge the executive to reveal actual details of the 7-Eleven "supposed" offer.
Having watched 7-Eleven for years, this does not seem to fit their portfolio.
More power to the shareholders as their shares keep rising. Couche-Tard could be a good match for Casey's.
It may prove interesting if Couche-Tard can place a few of their people on the board of directors; the truth may come out and bite the current executive in the butt.
Makes for good reading, if nothing else.
Rollie Pittet, Manager, Corporate Sales, Gas Plus Inc.
If the 100% franchise-focused 7-Eleven is interested in Casey's I guess that I don't understand their acquisition strategy when Casey's is a solid company-operated chain. Alternatively if Couche Tard's pursuit ultimately prevailed it seems to me that they'd leverage multiple operating synergies at both companies, I suspect, for the betterment of the combined operation.
Dick Meyer, Meyer & Associates
The idea of 7-Eleven as a player is hard to believe... [I] suspect it's to keep Couche-Tard's slate from winning. If [Alain] Bouchard isn't successful, [I] wonder who'll he'll go after next.
Midwest retailer (name withheld by request)
I am [an] MBA student completing my degree through the Florida Institute of Technology. Presently, a team of five MBA students from FIT are analyzing Casey's, and so far, we concur that the financials for Casey's are rock solid. The business model is sound and the board appears to be very competent.
It is my opinion that unless shareholders of Casey's are taken in by Couche-Tard they will vote to keep the incumbent board. It would not make financial sense for anyone to sell stock which has recently traded for as high as $44.68 a share for only $38.50 per share. This is 86.17% of its value. Shareholders are potentially giving up $6.18 per share.
If Couche-Tard were to acquire Casey's, then Casey's as we know and love it would cease to be. Casey's has survived for over four decades by slow growth and by making acquisitions only when the acquisition fit very well into its growth model. On the other hand, Couche-Tard appears to be on a feeding frenzy gobbling up anything in its path. Sooner or later they will stumble upon the inevitablethat no company in our history has grown this fast without a very detailed plan of acquisition. Every piece has to fit into the puzzle properly. The climate at Casey's does not remotely match that of Couche-Tard, which is a formula for disaster.
Bottom line is that it is in the best interest of both companies to back away from this deal, lick their wounds and go forward down separate paths. I can't see that any good could come out of a merger with 7-Eleven either.
David E. McClendon Sr.
Watch for more breaking news on Casey's, Couche-Tard and 7-Eleven today from CSP Daily News.
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