"We continue to believe that our stock is undervalued at recent trading levels and that Casey's is creating far greater value than is reflected in [image-nocss] Couche-Tard's inadequate $36.75-per-share offer," said Robert J. Myers, Casey's president and CEO. "We look forward to continuing to execute on our strategic growth initiatives."
The announcement comes two days after Couche-Tard president and CEO Alain Bouchard said in a quarterly earnings announcement, "I am disappointed by the decision of their Board of Directors to reject our offers and to create obstacles without even opening the dialog,... However, we will continue to evaluate our options and take decisions based on the actions of Casey's Board of Directors and its shareholders."
Following Couche-Tard's initial offer in June to purchase all outstanding shares of Casey's stock for $36 per share, Couche-Tard reported 19% of the shares were tendered. Couche-Tard then raised its purchase price offerfollowing on the heels of Casey's latest earnings reportto $36.75 per share.
However, after Casey's countered with a stack buyback of its owndubbed its recapitalization planfor between $38-$40, depending on how many shares were tendered, Couche-Tard saw its portion of shares tendered drop to 12%.
"Our recapitalization plan was successful on every level," said Myers. "It has provided the company with an opportunity to purchase a significant number of shares at an attractive price and has allowed shareholders who held their shares to benefit from the significant long-term value of owning a larger percentage of Casey's."
Casey's "Dutch auction" actually accrued offers to sell more than $28 million shares. However, a $500 million financing cap in the tender offer will limit the company to buying back about 13.2 million shares, according to the company.
"Casey's agreed to purchase a prorated amount of 47% of shares from each tendering stockholder," a Casey's spokesperson told CSP Daily News yesterday.
By placing a greater portion of Casey's ownership under corporate control, Casey's executives have dealt a strong blow to Couche-Tard's takeover effort. Couche-Tard officials had not commented on Casey's announcement as of press time yesterday.
Casey's will pay $38 per share for the approximately 13.2 million shares of its common stock, for a total cost of approximately $500 million, excluding fees and expenses related to the offer. The shares expected to be purchased represent approximately 25.8% of Casey's shares outstanding as of July 23, 2010.
The purchase will be funded by Casey's private placement of $569 million in 5.22% senior notes.
"The financing at a fixed rate of 5.22% for 10 years has allowed us to benefit from historically low interest rates and will drive EPS accretion," said Myers.
The final results of the offer will be determined subject to confirmation by the depositary of the proper delivery of the shares validly tendered and not withdrawn and will be announced on the fourth business day after the close of the offer, which was midnight Aug. 25. The actual number of shares to be purchased, the proration factor and the price per share will be announced following the completion of the confirmation process. Payment for the shares accepted for purchase, and return of all other shares tendered and not purchased, will occur promptly thereafter.
Meanwhile, Couche-Tard's $36.75 tender offer is scheduled to expire at midnight Monday, Aug. 30.
Meanwhile, in a letter to its employees, Myers issued a letter to Casey's employees announcing the results of the recapitalization plan stock buyback and the filing of the company's final proxy statement related to the nomination of its current board for reelection at its annual meeting to be held Thursday, Sept. 23.
"As you know, to further its lowball hostile takeover, Couche-Tard is attempting to replace our board with its hand-picked nominees," wrote Myers. "To be clear, Couche-Tard's nominees have one goal: a quick sale of our company at a low price. We are encouraging shareholdersincluding employees who own stock independently or participate in our 401(k) planto reject Couche-Tard's efforts by supporting the reelection of our board.
Goldman, Sachs & Co. is acting as financial advisor to Casey's, and Cravath, Swaine & Moore LLP and Ahlers & Cooney PC are providing legal advice.
Casey's General Stores, based in Ankeny, Iowa, has 1,531 corporate stores in nine states.
(Click here for previous CSP Daily News coverage of the Casey's/Couche-Tard saga.)
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