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Casey's says Couche-Tard using "questionable tactics" in acquisition effort
ANKENY, Iowa -- As the board of directors of Casey's General Stores, for the second time, urges shareholders to reject Alimentation Couche-Tard's tender offer to purchase all outstanding shares of the convenience store chain, it is again claiming it can "create far greater value for shareholders," and also calling into question some of the tactics Couche-Tard has used thus far.

"Couche-Tard has repeatedly stated that it is committed to buying Casey's," Casey's officials said in a statement yesterday, as reported in a Morgan Keegan/CSP Daily News Flash. "However, [image-nocss] Couche-Tard's decision to sell a significant ownership stake [that] would have been helpful to them in a proxy contest raises serious questions about their level of commitment to completing a transaction."

According to Casey's press release, prior to April 9 (the date that Couche-Tard made public its offer to acquire Casey's), Couche-Tard had accumulated a stake of nearly 2 million Casey's shares through a third-party brokerage account, which represented approximately 3.9% of the issued shares of the company.

Shortly after Couche-Tard made public its offer of $36 per share on April 9, it sold almost all of its shares at a price of $38.43 per share, thereby profiting on the market's reaction to the public announcement of its own offer, the Casey's release states. The 1.975 million shares sold by Couche-Tard on April 9 represented 12.7% of the trading volume in Casey's stock on that day, it claims. Couche-Tard currently owns only 362 Casey's shares.

"We are disappointed that the Casey's board of directors has recommended that its shareholders reject our $36 per share cash tender offer without any discussion or negotiation with us," aCouche-Tard spokesperson said in a statement provided to CSP Daily News.

"We believe our offer price represents full and fair value for Casey's," it said. "Our tender offer was commenced to allow the Casey's shareholders to decide if they wish to accept an immediate premium in cash, and thereby avoid any uncertainty with respect to the future stock performance of Casey's, a decision that the Casey's board seeks to deny its shareholders. We are committed to making this combination a reality as evidenced by the commencement of our tender offer and nomination of a slate of directors for election to the Casey's board of directors."

Casey's assertions are part of a four-page response to Couche-Tard's recent stock tender offer and move to place its own slate of candidates up for election to the Casey's Board of directors.

(Click on the Download Now button below to read the complete response.)

"Our board's position is clear: Shareholders should reject Couche-Tard's offer and not tender their shares," Casey's president and CEO Robert J. Myers said in the release. "We believe this is a self-serving and transparent attempt by Couche-Tard to take significant value that rightly belongs to Casey's shareholders. We believe our shareholders will reap far greater value from our industry leading performance, significant growth opportunities, successful execution of our strategic initiatives, strong balance sheet and real estate position, and the benefits of our highly differentiated business model and well-regarded self-distribution system."

Casey's snub echoes several of the statements it made after Couche-Tard's first public salvo to purchase the Iowa-based chain.

"Alimentation Couche-Tard Inc.'s $36 per common share cash tender offersubstantially undervalues Casey's and is not in the best interests of Casey's, its shareholders and other constituencies," it stated before outlining its numerous reasons for recommending rejection of the bid. Among them: Casey's can create far greater value for shareholders than reflected in the offer price. Couche-Tard is attempting to transfer to its shareholders the significant value in Casey's balance sheet and real estate position that rightly belongs to Casey's shareholders. The offer represents a low control premium and low EBITDA multiple, and Couche-Tard has been intentionally selective in the precedents it cites in its comparisons. The offer does not fully compensate Casey's shareholders for the potential synergy value of a combination. Couche-Tard's offer is highly conditioned and raises the question of whether the offer will ever close. Couche-Tard is using questionable tactics in an attempt to facilitate its offer. The timing of the offer is highly opportunistic and takes advantage of extraordinary equity market volatility. Consummation of the offer would have an adverse impact on Casey's other constituencies, including employees, suppliers, creditors, customers and the communities in which Casey's operates. (For full details, please click on the Download Now button below.)

For its part, Couche-Tard executives have reportedly spent the past week on a road show, beginning with numerous press interviews on June 2, the day the tender offer was announced, then heading to New York to begin meeting with Casey's investors and spelling out their $1.9 billion proposal.

Shareholders have until July 9 to decide whether to sell their shares or not.

Couche-Tard also progressed its strategy of submitting its own slate of candidates for the Casey's Board of Directors this week. As reported in yesterday's CSP Daily News, Couche-Tard identified its slate, which would be voted on by shareholders in September.

Commenting on Couche-Tard's intention to nominate nine individuals for election to Casey's board of directors at the company's 2010 Annual Meeting, Myers said, "This is clearly an attempt by Couche-Tard to gain control of Casey's and force through its inadequate proposal to acquire the company."

(Click here for previous CSP Daily News coverage of the Couche-Tard and Casey's saga.)

Alimentation Couche-Tard Inc., Laval, Quebec, 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 General Stores Inc., based in Ankeny, Iowa, has 1,513 corporate stores in 11 states.

(Click here to see what others are saying about the takeover bid.)

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