Shares in US c-store retailer Casey’s General Stores rose today (7 September) after the company, which is a target of Canada’s Couche-Tard, said it had received a rival takeover bid.
Casey’s, which has repeatedly rebuffed Couche-Tard’s offers, including the most recent bid of US$38.50 a share, said another suitor had made an offer worth $40 a share.
The US firm did not name the company behind the offer but said it had received “a preliminary proposal from a strategic third party regarding a consensual transaction at $40 per share in cash”.
Casey’s said the offer “substantially undervalues” the business and argued the value of the company “substantially exceeds” $40 a share.
However, Casey’s has left the door ajar for the mystery suitor. “While the board firmly believes that Casey’s value substantially exceeds $40 per share, it has authorised discussions with the third party to explore whether a transaction can be reached that reflects the true value of Casey’s – and is in the best interests of Casey’s, its shareholders and other constituencies,” it said.
Shares in Casey’s had jumped 7.9% to $41.96 at 10:30 ET today, above the offer from the unnamed suitor and Couche-Tard, which raised its bid last week.
Casey’s, which also posted its results for the first quarter of its fiscal 2011 year today, said the Couche-Tard offer “substantially undervalues Casey’s and is not in the best interests of Casey’s, its shareholders and other constituencies”.
Casey’s first-quarter net earnings fell 15.6% to US$37.3m due to US$6.2m in legal and advisory fees following the unsolicited offer from Couche-Tard.
However, without those fees, earnings per share would have been $0.81 against US$0.87 for the same period last year.
Nevertheless, EBIT was down to $59.5m from $67.1m in the same quarter of the previous year.
The company posted $1.36bn revenue for the quarter, up on the $1.19bn posted in the same quarter last year.
The convenience operator also announced that it has signed commitments to acquire an additional 52 stores that it anticipates purchasing before the end of the year.
“The solid first quarter results demonstrate that Casey’s continues to execute well on our strategic plan,” said president and CEO Robert Myers.
“In addition to rolling out our in-store redesign programme, we are expanding Casey’s footprint in the Midwest through acquisitions and construction of new stores. Our substantial progress to date, coupled with our robust acquisition pipeline, has us ahead of schedule in achieving our fiscal 2011 goal of increasing the total number of Casey’s stores by 4-6%. With Casey’s strong post-recapitalisation balance sheet, we expect to continue executing our growth initiatives and driving shareholder returns, including increasing our dividend.”