"But the U.S. convenience store space remains highly fragmented, and should Couche-Tard not acquire Casey's, we would expect the [image-nocss] company to pursue other potential targets," she wrote in a report cited by the news agency.During a webcast for analysts and investors on its first fiscal quarter 2011 results (see story in this issue of CSP Daily News), Couche-Tard president and CEO Alain Bouchard said, "Whether or not we are able to make a deal with Casey's, we expect to be making additions to the network in the coming months."
He added, "Our geographic scope of our diversification into fresh foodservices and new proprietary products contribute to reduce risk and increase opportunities for profit. Our performance in the current conditions suggests we have a solid claim to being recession resistant."
Meanwhile, on June 24, 2010, Couche-Tard signed an agreement to acquire 10 company-operated stores from Dalton, Ga.-based Compac Food Stores Inc. Nine of the stores are located in the greater Mobile, Ala., area and one is located in Pensacola, Fla. The transaction is anticipated to close in September 2010 and is subject to standard regulatory approvals and closing conditions. The company would not disclose the purchase price, citing a confidentiality agreement. Internal available cash will pay for the transaction, it said.
Bouchard declined to speak in detail about Casey's during the webcast, and would not take questions on the subject during the question-and-answer session.
Couche-Tard announced its financial results a day after Casey's appealed directly to its shareholders to reject Couche-Tard's hostile takeover bid and its slate of director candidates.
In a letter sent days after its Canadian rival made its own appeal, Casey's CEO Robert Myers urged shareholders to stick with the Iowa-based convenience store chain's growth initiatives. "Make no mistake, Couche-Tard is attempting to replace your board with its hand-picked slate of directors to achieve one purpose: a quick sale of Casey's to Couche-Tard at a low price," he wrote.
(Click here for previous CSP Daily News coverage.)
Myers accused Couche-Tard of continuing to make misleading statements about Casey's board to "distract" shareholders from the "inadequacy of its offer." He said Casey's shares have outperformed industry rivals and the markets while delivering strong returns and high dividends over the past few years.
Its recapitalization and growth plan is also delivering more value than Couche-Tard's "small" 16% premium.
He argued that Casey's board is acting in the best interests of all shareholders by rejecting Couche-Tard's $36.75 per share offer.
The board concluded there was no basis for discussions because of Couche-Tard's "questionable behaviorincluding its allegedly manipulative sale of Casey's sharesand an unwillingness to boost its offer.
Myers also accused Couche-Tard of mischaracterizing Casey's recapitalization plan to distract shareholders from the real issueto obtain the lowest borrowing costs possible, said CP. Casey's plans to spend up to $500 million to buy 25% of its own shares at a price ranging between $38 and $40 per share. It would issue low-interest debt to pay for the stock.
Last week, Couche-Tard urged Casey's shareholders to send a clear and strong message to their board that they want directors "who will act in their best interests." It claimed the stock buyback plan funded from a $569 million private placement is designed to entrench Casey's management by transferring value from shareholders to noteholders.
A "poison put" feature of the funding would force the company to pay about $100 million in penalties should Couche-Tard or any other party acquire 35% or more of Casey's shares or if Casey's shareholders vote to replace its board. But Casey's said the insurance companies that will provide the funding requested premiums for a change in control as a direct result of Couche-Tard's hostile offer.
"We don't believe we could have secured this very attractive financing package without it," Casey's said.
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.
Casey's has 1,531 stores as of June 30, 2010. The Ankeny, Iowa-based company and its wholly owned subsidiaries operate c-stores under the name Casey's General Store, HandiMart and Just Diesel in nine Midwestern states, primarily Iowa, Missouri and Illinois. The stores carry a broad selection of food (including freshly prepared foods such as pizza, donuts and sandwiches), beverages, tobacco products, health and beauty aids, automotive products and other nonfood items. In addition, all of its stores offer gasoline.
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