Shares of Casey’s General Stores Incorporated (Casey’s) (Nasdaq: CASY) rose sharply Friday following news of its rejection of Canadian competitor Alimentation Couche-Tard Inc (Couche-Tard) takeover bid. Casey’s said the offer is too low and is not in the best interest of investors in the long term.
Couche-Tard had submitted an all-cash $36 per share bid, or $1.8 billion, to buy Casey’s in March.
In a public statement to Alain Bouchard, president and CEO of Couche-Tard, Robert Myres, president and CEO of Casey’s, said that he believes that the long-term value of Casey’s is not reflected in the Couche-Tard offer.
”Casey’s has navigated the downturn successfully and is extremely well positioned to benefit as the economic recovery continues,” Myres said.
Some analysts close to the convenience store space say that Casey’s value is nearer to $40, considering the company’s strong balance sheet, management and potential earnings growth.
Casey’s employs 19,000 and operate more than 1,500 convenience stores in the U.S. Midwest. The Iowa-based company has stores in nine states, primarily in Iowa, Missouri and Illinois.
Through its subsidiaries Casey’s General Stores, HandiMart and Just Diesel, the company sells groceries, household incidentals, food and beverages, as well as gasoline.
Casey’s closed the third quarter ended January 31 with earnings of $17.2 million on $1.1 billion in revenue, up 23% and 31% from the equivalent period last year.
Casey’s continues to operate with a strong balance sheet, including approximately $153 million in cash. Management intends to use this cash for strategic acquisitions and expansion within the convenience store space.
Golman, Sachs & Company served as advisor to Casey regarding the takeover bid.
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