ANKENY & WEST DES MOINES, Iowa -- In a deal that Casey's General Stores Inc. CFO Bill Walljasper hinted at during the company's first-quarter 2013 earnings call Tuesday morning, Casey's and Kum & Go LC announced Tuesday afternoon that they had signed an asset purchase agreement for Casey's to acquire 22 convenience stores from Kum & Go in Iowa, Missouri and North Dakota.
And in an odd twist, this is the second 22-store deal between the two Iowa companies. In June 2011, Kum & Go sold Casey's that same number of stores, all in Iowa (see Related Content below for previous CSP Daily News coverage).
The stores are located in Sigourney, Osceola, Pella, Oskaloosa (2), Knoxville (2), Clarinda, Forest City, Greenfield, Monticello, Creston (2), Harlan, Albia, Emmetsburg, Marshalltown, Hawarden and Shenandoah, Iowa; Kirksville and Marshfield, Mo.; and Horace, N.D.
As reported in a Raymond James/CSP Daily News Flash on Tuesday, the transaction with Kum & Go is expected to close in November 2012. The acquisition is subject to certain regulatory approvals and other customary closing conditions, including the receipt of satisfactory inspection reports related to the stores.
"Our company is committed to carefully planned, strategic growth--that's evidenced by the fact that we'll open 40 new stores this year alone," said Kyle J. Krause, Kum & Go president and CEO. "It's our continued desire to consolidate and strengthen our asset base and offer a consistent brand to our customers in Kum & Go's core markets. The sale of these properties, in addition to our new store growth, brings us one step closer to carrying out that strategy."
Robert J. Myers, president and CEO of Casey's, said, "These stores are an excellent fit to our existing store base and will allow us an opportunity to operate in a new state. We expect this acquisition to be accretive in the first year of operation and enhance future earnings as we integrate our prepared food operations."
On the call, Walljasper said, "We ... have 27 written commitments for acquisitions that we expect to close on in the near future. We're optimistic about the acquisition pipeline going forward."
When asked what size acquisitions Casey's is looking for, he added, "We're not afraid to look at any size at this point right now. We have a lot of financial capacity. If you look at our debt covenants, we have the room to add probably about $400 million to $500 million onto the balance sheet and still be within a really good leverage range. So that will buy a lot of stores, so I think a lot will depend on quality of the assets and the geographic dispersement of some of those assets or how those will be integrated."
West Des Moines, Iowa-based Kum & Go has more than 400 convenience stores in 11 states (Iowa, Arkansas, Colorado, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Dakota and Wyoming).
Based in Ankeny, Iowa, Casey's operates approximately 1,700 stores in 11 states.
See Related Content below for CSP Daily News coverage of Casey's latest earnings report.
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