CORRECTED - UPDATE 3-Casey's says it has higher bid than Couche-Tard's
(Corrects timing of buyback announcement to July from April in 13th paragraph)
* Casey's recommends against Couche-Tard offer
* Says rival bid of $40 per share too low, but will talk
* Casey's stock rises 9.3 percent to $42.49 (Adds Couche-Tard comment. U.S. dollars unless noted)
By Pav Jordan
TORONTO, Sept 7 (Reuters) - Casey's General Stores (CASY.O), the U.S. Midwest convenience-store chain fending off a takeover bid from Canada's Alimentation Couche-Tard Inc [ATD.UL](ATDb.TO), said on Tuesday it has received a rival, $2.1 billion proposal, sending its share price soaring.
Casey's said a "strategic third party" offered the company $40 per share in cash, or 3.9 percent more than the $38.50 offered by Couche-Tard on Sept. 1.
Investors drove Casey's stock up 9.3 percent to $42.49, optimistic that the price could go even higher.
Casey's said the new offer, which compares with Couche-Tard's $2 billion proposal, was still too little to seal a deal but enough for it to engage in talks with the third party, which it did not identify.
"While the board firmly believes that Casey's value substantially exceeds $40 per share, it has authorized discussions with the third party to explore whether a transaction can be reached that reflects Casey's true value and is in the best interests of Casey's, its shareholders and other constituencies," Casey's said in a statement.
The offer comes two weeks before a Sept. 23 shareholder vote to elect directors to Casey's board. Couche-Tard, which operates more than 5,800 stores in North America, has nominated its own slate of candidates as it tries to sway investors to its bid.
Couche-Tard said in a statement the non-binding proposal was an attempt by Casey's to artificially inflate its stock price leading up to the vote.
Couche-Tard, Canada's largest convenience store operator, has grown steadily over the years through acquisitions and a push to expand in the United States.
The Montreal-based company is looking for more U.S. deals and wants another along the lines of its $804 million purchase of the Circle K chain in 2003.
Casey's, which operates more than 1,500 stores in the United States, said on Tuesday its board has unanimously recommended against the offer from Couche-Tard, which has sweetened its bid for Casey's twice.
"We believe both of these proposals substantially undervalue Casey's for a number of reasons," the U.S. company said. "Analysts see Casey's intrinsic value at $45 per share, without reflecting a takeover premium."
Couche-Tard first offered to buy Casey's in April, proposing a takeover at $36 a share, or $1.85 billion [ID:nN01116711].
In July, Casey's announced a $500 million plan to buy back 25 percent of its shares at $38 a share.
The recapitalization boosted the value of Casey's shares, and also implied a value for the company, bankers said.
"Casey's value proposition has dramatically increased since Couche-Tard launched its hostile offer in April through the execution of our strategic initiatives and successful recapitalization, boosting Casey's ability to deliver shareholder returns," the company said.
Alimentation Couche-Tard shares fell 1.46 percent to C$23.65 on the Toronto Stock Exchange in midafternoon trade on Tuesday. ($1=$1.05 Canadian) (Reporting by Pav Jordan; Editing by Frank McGurty, Peter Galloway and Steve Orlofsky)
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