"While immediate benefits from the bill are modest, more substantial savings are expected within 12 months," wrote Michael Van Aelst, an analyst with TD Newcrest, Montreal, in a research note focusing on Alimentation Couche-Tard Inc. "We estimate that changes to debit-card swipe fees could amount to savings of as much as $25 million to $35 million annually for Couche-Tard."[image-nocss]
He added, "At this point, it is too early to raise our numbers as the Federal Reserve still has nine months before it has to issue regulations (and then service providers have another three months to implement the changes), and we don't yet know what the Fed will determine to be reasonable fees. Nevertheless, this certainly has the potential to be a meaningful positive development for the entire U.S. retail industry, and we estimate that it could to boost Couche-Tard's F12E EPS [earnings per share] by $0.09-0.14 per share and our target by about another $1 to $2 [Canadian]."
Can Aelst said, "Credit-card fees, which are not covered under this financial service reform, are believed to be double that of debit-card fees for Couche-Tard. We expect retail associations to continue to lobby the government to rein in credit-card fees as well."
Meanwhile, Laval, Quebec-based Couche-Tard is paying each of its independent nominees to the board of takeover target Casey's General Stores Inc. more than $20,000, the Canadian convenience store chain said in a preliminary proxy statement filed with U.S. Securities & Exchange Commission (SEC), according to a report by the Canadian Press.
The nine candidates will get the one-time payment and "all reasonable expenses" for agreeing to serve as a nominee for the board of Casey's, which has rebuffed Couche-Tard's $1.9 billion bid launched three months ago.
If elected, they would also be eligible to receive other benefits from Casey's, including an annual retainer of $40,000 and a meeting fee of $1,000 for each shareholder and committee meeting attended.
Couche-Tard declined to comment about the payments.
Board candidates are deemed independent according to securities law because they are not officers or employees of Ankeny, Iowa-based Casey's.
Outside board members are supposed to bring unbiased opinions about the company's decisions. But in this case, said the report, they would be elected by Casey's shareholders to pave the way for a negotiated sale to Couche-Tard, which so far has been thwarted by the existing board.
Couche-Tard said the nominees understand that they have an obligation under Iowa law to discharge their responsibilities as directors in good faith and consistent with their fiduciary duties to Casey's and its shareholders.
"The only commitment Couche-Tard and the purchaser have sought from the nominees is that they will act in the best interest of Casey's and its shareholders and exercise their independent judgment," said the proxy statement.
But it adds that a vote for the nominees lets Casey's and the nominees know that you want to have the opportunity to accept the offer. "We believe that you deserve a board of directors that is answerable to you and that will act in your best interests. By voting for the nominees, you can demonstrate to the nominees and Casey's your support for the offer and proposed merger," shareholders are told.
The election will take place at Casey's annual meeting, expected to be held in late September or early October, the report said.
Couche-Tard has set a deadline of August 6 for Casey's shareholders to tender to its $1.9 billion offer to take over the 1,500-store chain.
On Thursday, the company slightly increased its hostile takeover bid to $36.75 cash per Casey's share, up from $36.00, an improvement of about 2% over Couche-Tard's initial bid this spring.
The offer is subject to a number of conditions, including the removal of roadblocks that Casey's put in place to hamper Couche-Tard's takeover efforts.
Casey's is expected to reject the offer, the CP said, but has urged its shareholders to hold off on tendering their stock until it makes a recommendation in "due course."
Couche-Tard operates a network of 5,883 convenience 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 has 1,513 corporate stores in nine states.
(Click here for previous CSP Daily News coverage of the Casey's/Couche-Tard saga.)
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