Mergers & Acquisitions

Investment Firm Encouraging Casey's to Explore Sale

JCP issues letter to shareholders claiming c-store chain is 'undervalued'

HOUSTON -- A group of shareholders of Casey's General Stores Inc. have issued an open letter to all Casey's shareholders suggesting that the chain is “significantly undervalued” and urging the board to “immediately engage a financial adviser to explore all strategic alternatives, including a potential sale, merger or similar transaction in order to maximize shareholder value.”

JCP Investment Management LLC, BLR Partners LP and Joshua E. Schechter collectively own about $45 million worth of Casey's General Stores Inc. common stock. Houston-based JCP was instrumental in the sale of The Pantry Inc. to Laval, Quebec-based c-store company Alimentation Couche-Tard Inc. in 2014 and as part of a settlement agreement with San Antonio-based c-store company CST Brands Inc., which resulted in a sale to Couche-Tard in 2016.

The letter says Casey's “has missed earnings targets for seven straight quarters due in part to decelerating same-store sales and bloated operational expenses.”

It also claims that Casey’s has expanded too rapidly. “We believe such rapid expansion coupled with seeming declining returns on invested capital is symptomatic of a company that has been unable to manage growth effectively.”

Ankeny, Iowa-based Casey's General Stores operates more than 2,000 convenience stores in 15 states. It ranked No. 4 in CSP's 2017 Top 202 list of the largest c-store chains in the United States.

Watch for details in CSP Daily News.

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