As reported in a CSP Daily News Flash yesterday, the letter to Casey's, dated June 28, 2010, said, "We urge the management and the board of directors of Casey's to engage in a formal negotiation with the management [image-nocss] team of Alimentation Couche-Tard with respect to their $36 cash offer to acquire 100% of the outstanding shares of Casey's. Anything less gives the impression that independence, not the maximization of shareholder value, is the board's highest priority."
It continued, "The response by Casey's board of directors, made public in a 14D-9 filing dated June 7, 2010, makes a strong argument that Casey's stock is undervalued at $36 per share. We agree that the offer does not adequately capture the full earnings power and potential of Casey's when optimally capitalized. We also believe that the offer does not account for the revenue synergies and cost savings created though a combination of Casey's and Couche-Tard.
"Since the unsolicited offer by Couche-Tard to acquire Casey's for $36 in cash, Casey's board of directors and management have not engaged in meaningful discussion with Couche-Tard, despite Couche-Tard's repeated stated availability to discuss the terms and structure of the proposed transaction. That willingness to negotiate was reaffirmed to us by the senior management of Couche-Tard during their visit to ClearBridge's offices on June 4, 2010.
"However, it is the fiduciary duty of Casey's management and the board to negotiate in good faith and act in the best interest of Casey's shareholders. Discussion of the offer or other options does not restrict or preclude the board's ability to reject Couche-Tard's offer, or any subsequent alternative, that may result from negotiation, in our view. Conversely, the board's intransigence discourages a higher offer and could result in shareholder wealth destruction should the Couche-Tard tender offer be withdrawn or not accepted by shareholders.
"We urge the board of directors to reconsider its position with regard to the Couche-Tard tender and negotiate in good faith for the benefit of all shareholders."
Casey's did not return CSP Daily News calls for comment by press time.
As of June 24, 2010, ClearBridge owned 810,739 shares (approximately 1.6%)of Casey's common stock, according to the SEC. The New York City-based firm, a registered investment adviser,is Legg Mason's largest equity manager with approximately $54.9 billion in assets under management as of March 31, 2010.
(Click here for previous CSP Daily News coverage of the Casey's/Couche-Tard saga.)
Couche-Tard, based in 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, based in Ankeny, Iowa, has 1,513 corporate stores in nine states.
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