UPDATE 2-Couche-Tard abandons $2 bln Casey's bid

Thu Sep 30, 2010 6:48pm EDT

* Says some conditions had not been satisfied by deadline

* Offer expired at 5 p.m. ET, Sept 30

* Analyst says possible it could return in medium term

(Adds details, analyst comment. In U.S. dollars.)

By Solarina Ho

TORONTO, Sept 30 (Reuters) - Canada's Alimentation Couche-Tard (ATDb.TO) abandoned its $2 billion hostile takeover bid for Casey's General Stores (CASY.O) on Thursday, nearly half a year after it made its initial offer for the U.S. convenience store chain.

Couche-Tard, Canada's largest convenience store operator, has looked to expand in the United States and add Casey's 1,500-plus U.S. Midwest stores to its network of 5,800 North American outlets.

Casey's is now expected to turn its attention to negotiating a firm deal with 7-Eleven. The Japanese-owned convenience store behemoth made a late, nonbinding offer to buy Casey's for $2.03 billion, or $40 a share. That trumped Couche-Tard's final offer of $38.50.

Ankeny, Iowa-based Casey's repeatedly rebuffed Couche-Tard, saying it was making low-ball offers. It refused to negotiate unless Couche-Tard provided an acceptable starting point.

Couche-Tard said on a number of occasions it would consider raising its offer if it was given the same access to Casey's books as 7-Eleven.

Canaccord Genuity analyst Derek Dley said the outcome emphasized Couche-Tard's disciplined nature.

"This is what we've seen in the past, and I expect them to remain disciplined and shrewd in acquisitions going forward," he said. "That being said, Casey's was the most likely way to add in one big swoop to Couche-Tard's network."

With Casey's no longer a target, Couche-Tard may cast an eye elsewhere and analysts have noted other acquisition opportunities within the U.S. convenience store market. There are roughly 17 chains with networks in the 300 to 1000-store range, Dley said.

"I think this is where Couche-Tard's at. They may shift focus toward some of these companies, going ahead."

Couche-Tard made the announcement shortly after its $38.50-a-share offer for Casey's expired at 5 p.m.

"We have decided not to continue to pursue our offer given Casey's board's repeated refusal to negotiate with us," said Chief Executive Alain Bouchard in a statement.

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Chronology on Casey's takeover bid: [nN30293850]

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SHIFTING FOCUS ELSEWHERE?

"In terms of Casey's, this might even shift the ball a little bit more into 7-Eleven's court," said Dley.

"The leverage that they may have had -- where they were looking to have an escalating bid -- is now gone so it will be interesting to see what 7-Eleven does going forward."

It was the fourth deadline since Couche-Tard first approached Casey's shareholders with its initial offer of $1.85 billion, or $36 a share, in June, in what became a drawn-out and increasingly hostile exchange.

While Couche-Tard has laid its bid to rest, it could revisit again should Casey's talks with 7-Eleven fall through.

"They have a history of that. ... It is a possibility I would say in the medium term. I wouldn't really see it in the short term," said Dley.

Couche-Tard shares closed up 16 Canadian cents at C$23.01 on the Toronto Stock Exchange. Casey's slipped 51 cents, or 1.2 percent, to C$41.75 on the Nasdaq.

($1=$1.03 Canadian) (Reporting by Solarina Ho; Editing by Frank McGurty)

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