Casey’s General Stores will buy back 28.2 million shares for $500 million in Dutch auction

Casey’s General Stores: Dutch auction to be $500M

ANKENY, Iowa — Casey’s General Stores Inc. said Thursday preliminary results of its modified Dutch auction self tender offer show it will buy back about a quarter of its stock for $500 million.

The offer is part of a recapitalization plan for Casey’s, which has received unsolicited takeover offers from convenience store operator Alimentation Couche-Tard Inc. The Canadian company has extended its offer to buy all the outstanding shares of Casey’s General Stores for $36.75 apiece.

The Dutch auction offer — under which shareholders chose to tender shares from $38 to $40 each — expired at midnight Wednesday.

Casey’s said Thursday a total of 28.2 million shares were tendered at the minimum purchase of $38 per share, including 14 million shares tendered through notice of guaranteed delivery. Assuming that all those shares are delivered, Casey’s expects to buy a prorated amount of 47 percent of shares from each tendering stockholder, although all shares purchased will be at the same price.

Casey’s said it expects to accept for payment about 13.2 million common shares for $38 apiece for a total cost of $500 million. That excludes fees and expenses.

Those shares represent about 25.8 percent of shares outstanding as of late July.

CEO Robert J. Myers said the company has received financing at a fixed rate of 5.22 percent for a decade, allowing it to boost earnings per share.

“We continue to believe that our stock is undervalued at recent trading levels and that Casey’s is creating far greater value than is reflected in Couche-Tard’s inadequate $36.75 per share offer,” he said.

The company now expects to earn $2.72 per share in fiscal 2011 and $3.31 per share in 2012. Analysts expect earnings per share of $2.57 in fiscal 2011 and $2.99 in fiscal 2012, according to Thomson Reuters.

The final results of the offer will be announced after it is confirmed. Payment will occur after.

Goldman, Sachs & Co. is providing financial advice to Casey’s while Cravath, Swaine & Moore LLP and Ahlers & Cooney, PC are offering legal advice.

Shares of Casey’s fell 26 cents to $37.03 in morning trading Thursday.