ANKENY, Iowa -- Casey's General Stores, the largest convenience chain in the Midwest and one of a handful of public companies in the channel, continued its acquisition push, picking up the well-respected 33-store HandiMart business from Nordstrom Oil Co.
Casey's will pay roughly $63 million for the Cedar Rapids-based outfit, which generated nearly $174 million in sales last fiscal year.
The acquisition, first reported Tuesday in a CSP Daily News Flash, marks the second deal for the 1,400-store company. In January, Casey's completed [image-nocss] the purchase of 51 sites from Lincoln, Neb. Concern Gas 'N Shop Inc. for $29.2 million.
The moves underscore a significant shift for Casey's, which until this year had built much of its prodigious portfolio through groundups.
"The acquisition of the HandiMart locations is an excellent fit with our acquisition strategy and further strengthens our existing market presence in Iowa," Casey's CEO Robert J. Myers said in a release. They are high-volume stores in excellent locations."
He added, We expect this acquisition to be immediately accretive to earnings and provide further earnings enhancements as we realize operating efficiencies and add our prepared food program.
On the flipside, for Nordstrom the deal continues the drumbeat of midsize players, those between 15 to 75 locations, that are bowing out of the retail sector due to changing economics.
As President David Nordstrom told the Cedar Rapids Gazette, c-stores are a ''very competitive and mature industry, and chains of our size are finding it more and more difficult to compete. Nordstrom Oil has been operated by the Nordstrom family since the 1970s.
The company will retain its restaurant businesses, Java Creek Cafe, and Landmark Restaurant, as well as its stake in Amana-Nordstrom Inc., which owns three hotel properties in the Cedar Rapids and Amana areas, the newspaper reported.
Wise Investment
Long recognized as a fine retailer, but with little interest in technology such as point-of-sale (POS) systems, Casey's has embarked on a systems upgrade over the past several years that analysts say is making it possible for the chain to be a serious player in a consolidating industry. The rollout of their technology has facilitated its ability to be a buyer, Adam Sendler, Morgan Keegan associate retail analyst, told CSP Daily News. It's a lot easier to go into a market and to more effectively grow it when your systems are in place. That's what we're seeing with Casey's.
Sendler also complimented the chain's latest acquisition, describing HandiMart as a sound operator with solid foodservice operations. It also extends Casey's presence in Cedar Rapids, where it previously operated only one store and now adds another 17.
By mid-day, Casey's stock had increased by 1.63%, bumping up to over $23 a share, the highest in a 52-week period.
The deal, which is expected to close during the company's second fiscal quarter and will be funded by existing cash and debt financing, comes two months after Casey's reported a solid performance for the fourth quarter of its fiscal year ending April 30. In that June report, company chairman and CEO Ron Lamb unveiled plans to acquire another 30 stores and build 10. The retailer at the time completed expansion of its distribution center, gaining the ability to serve at least 1,000 more stores.
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