Convenience chain Casey’s tells shareholders to reject board nominations by rival Couche-Tard

Casey’s tells shareholders to reject Couche-Tard

ANKENY, Iowa — Casey’s General Stores sent a letter to its shareholders urging them not to vote in favor of any board nominees favored by a competitor Alimentation Couche-Tard Inc., which is attempting to take over the convenience store chain.

Couche-Tard’s slate is “simply an attempt to advance its inadequate, unsolicited offer for Casey’s,” CEO Robert J. Myers told shareholders in a letter Thursday.

Casey’s is scheduled to hold its annual meeting Sept. 23.

Couche-Tard, a convenience store operator based in Canada that runs the Circle K chain and others, has made two offers for the Midwest chain. Casey’s has called the offers inadequate and rejected them.

Last month Couche-Tard raised its takeover bid to roughly $1.87 billion in cash plus Casey’s $28 million debt. It extended the offer until Aug. 30.

Myers told shareholders the company is performing well and is undervalued.

Earlier this week, Casey’s completed a private placement for $569 million of 5.22 percent senior unsecured notes due 2020. It plans to use the net proceeds to pay for its recapitalization plan, which will be executed through a modified Dutch auction self tender offer, worth $38 to $40 per share. That offer is worth up to $500 million in the value of shares of its common stock. The company will also use net proceeds to pay fees and expenses in connection with the offer.

Myers said the company plans to buy 25 percent of its outstanding shares. He said the board has reviewed the offers, the first at $36 per share and the second at $36.75 per share.

“We believe Casey’s continuing strong performance and strategic growth initiatives will deliver you far greater value than Couche-Tard’s lowball offer,” he said.

He said the number of shares tendered into Couche-Tard’s offer has fallen from 19.2 percent of outstanding shares on July 12 to 12 percent on Aug. 2.

Couche-Tard criticized the notes sale in a written statement, saying, “We believe the Casey’s leveraged recapitalization plan confirms there are no other buyers for Casey’s at a price exceeding Couche-Tard’s offer.”

The Canadian company also said the notes sale was designed to block its offer to buy the company.

“In our view, the private placement of notes recently completed by Casey’s … is designed to entrench the Casey’s board and management at the expense of the Casey’s shareholders,” the company said.

Couche-Tard noted the private placement included a feature that requires noteholders be paid about $95 million in penalties in addition to the outstanding principal amount and accrued interest on the notes if any party acquires 35 percent or more of Casey’s outstanding shares.

That would make it almost $2 a share more expensive to buy Casey’s, Couche-Tard said.

Shares of Casey’s General Stores Inc. added 8 cents to $37.71 in aftermarket trading Thursday after falling 10 cents to $37.63 during the regular session.