7-Eleven is mystery bidder for Casey's: source
NEW YORK/TORONTO (Reuters) - Convenience store operator 7-Eleven is the mystery third party that offered to buy Casey's General Stores Inc (CASY.O) for $40 a share, or $2.03 billion, a source familiar with the situation said on Wednesday.
The bid exceeds the $38.50 a share offered by Canada's largest convenience store chain, Alimentation Couche-Tard Inc (ATDb.TO), which has been embroiled in a hostile takeover bid for the smaller rival since April.
Casey's, an Ankeny, Iowa-based Midwest chain, announced on Tuesday that it received a rival bid from an unidentified "strategic third party" and that the new bid, while still low, was enough for it to engage in talks.
"While the Board firmly believes that Casey's value substantially exceeds $40 per share, it has authorized discussions with the third party, the statement said.
A spokeswoman for 7-Eleven declined to comment. Casey's was not immediately available for comment.
One analyst said he did not expect a deal to go through at $40 a share and the price would have to be higher.
"It surprised me a little. My understanding was 7-Eleven was moving toward more franchise locations and less company-operated locations. But with that said, they're certainly large enough," said Ben Brownlow, an analyst with Morgan Keegan & Company.
"I think it's a serious bid. Whether it goes through, I guess it depends on how high both parties are willing to go because, obviously, Casey's board feels $40 significantly undervalues the firm, the company. I definitely don't expect a bid to go through at $40."
Couche-Tard said in a statement on Tuesday that the nonbinding proposal was an attempt by Casey's to artificially inflate its stock price ahead of a shareholder vote on September 23 to elect directors to Casey's board. Couche-Tard has nominated its own list of candidates to replace the board.
7-Eleven, a subsidiary of Japan's Seven & I Holdings Co (3382.T), is the world's largest convenience store chain, operating over 7,100 stores in Canada and the United States and at least 31,400-plus stores around the world.
"It seems to me if someone's going to go up against Couche-Tard, they've met their match, so to speak," said Brownlow.
The identity of the third-party bidder was earlier reported by the Wall Street Journal.
(Reporting by Megan Davies in New York, Solarina Ho in Toronto and additional reporting by Euan Rocha in Toronto; editing by Andre Grenon)