US c-store operator Casey’s General Stores has unveiled a US$500m recapitalisation plan for and reaffirmed its strategy to grow the business amid continued interest from Canadian suitor Couche-Tard.
The recapitalisation will be executed through a modified ‘Dutch auction’ self-tender offer for up to $500m of the company’s common stock.
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The offer will be at a price of US$38-40 per share and will be funded by a combination of debt financing and available cash.
The move is the latest salvo in an increasingly hostile pursuit of Casey’s by Couche-Tard, which last week increased its offer for the business to $36.75 a share.
Casey’s board believes the recapitalisation plan will “generate significant value for its shareholders” and allow investors “to continue in participating in the company’s substantial upside”.
The retailer said the scheme would be “highly accretive to its diluted earnings per share at all prices in the offer range and is financial prudent given the company’s strong balance sheet”.
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By GlobalDataCasey’s president and CEO Robert J Myers added: “The Casey’s board believes our stock is meaningfully undervalued at recent trading levels and that the company is under-levered given Casey’s strong balance sheet and consistent cash flow.
“The repurchase of approximately 25% of Casey’s outstanding shares in this highly accretive transaction is very compelling. Moreover, we are excited about our prospects and our ability to significantly grow our footprint, and expand our new store design and offerings across our store base to drive additional shareholder value.”
The board also unanimously rejected Couche-Tard’s slightly revised tender offer “as it substantially undervalues Casey’s and is not in the best interests of Casey’s, its shareholders and other constituencies”.
Myers said: “Couche-Tard does not believe in the true value of Casey’s, as evidenced by its CEO’s comment in its 2010 Annual Report: ‘When speculators moved [Casey’s] stock above $38 on the day of announcement, we simply knew at that time that we would not be buyers at that level.'”
In a 14D-9 form filed today, the company said Couche-Tard’s offer does not take into account Casey’s strong recent performance and continuing momentum.
