* New offer brings total value up to about $2 bln
* Couche-Tard secures financing of up to $1.5 bln
* Casey's shares up 3 pct, Couche-Tard up 4 pct
* Casey's advises shareholders to refrain from action
(Adds analyst comments. In U.S. dollars unless noted)
By Solarina Ho
TORONTO, Sept 1 Canada's Alimentation
Couche-Tard Inc (ATDb.TO) raised its offer for Casey's General
Stores (CASY.O) to $38.50 a share on Wednesday, trumping the
$38 a share offered by Casey's under a recapitalization plan
aimed at thwarting a Couche-Tard takeover.
The sweetened offer, valued at $2 billion, drove shares in
the U.S. Midwest convenience store chain up nearly 3 percent to
close at $38.65 on Nasdaq. Couche-Tard shares climbed 4 percent
to C$23.80 in Toronto.
Casey's advised shareholders to refrain from taking any
action while its board reviews the sweetened offer and makes a
Couche-Tard, Canada's largest convenience store operator,
has grown steadily through acquisitions over the years as it
pushes to expand in the United States.
"Couche-Tard wants to grow ... They want to double their
store count," said Derek Dley, an analyst at Canaccord Genuity
who added that the outcome of the hostile bid was still
The Montreal-based company makes no secret it is on the
prowl for more U.S. deals and wants another along the lines of
its $804 million purchase of the Circle K chain in 2003.
"They've done good deals at very low prices ... when they
bought Circle K ... that was a great deal for them," said
Michael Broudo, an analyst with Miller Tabak & Co.
"Maybe they have that in the back of their mind that
they've been able to do it before."
Couche-Tard said it obtained a four-year, unsecured term
loan facility from a consortium of Canadian and foreign
institutions for $1.5 billion to help finance the acquisition.
It said the loan was expected to be at LIBOR plus 300 basis
points, or the U.S. base rate plus 175 basis points, as
applicable. The loan is repayable at any time with no penalty.
"We remain ready, willing and able to complete a
transaction with Casey's expeditiously and urge the Casey's
board of directors to begin discussions with Couche-Tard
immediately to maximize value for the Casey's shareholders and
make this combination a reality," Couche-Tard President and
Chief Executive Alain Bouchard said in a statement.
The takeover fight has escalated since Couche-Tard made its
initial offer of $36 a share, or $1.85 billion, on April 9
Couche-Tard raised its bid in July to $36.75 a share, or
Casey's, which operates more than 1,500 stores, responded
within the week to the July offer by announcing its $500
million plan to buy back 25 percent of its shares.
The buyback offer, designed to thwart the Couche-Tard bid,
evoked a strong response, with about 50 percent of outstanding
shares being tendered, Casey's said.
Some analysts wonder if the higher Couche-Tard offer price
is too little, too late.
"I don't think $38.50 is going to do it," said Broudo.
"Most of the short-term shareholders are out."
After taking into consideration the share buyback and its
$500 million-plus price tag, the $38 a share offer is also
essentially the same as the July offer of $36.75 from an
enterprise value standpoint, one investment banker pointed
Analysts agreed that long-term investors who did not tender
at Casey's $38 a share buyback may hold out for much more.
After the recapitalization plan, analysts raised their
price target for Casey's to between $39 and $50 a share over
the next 12 months.
ANNUAL GENERAL MEETING
The sweetened bid comes just before a key shareholder vote
to elect directors to Casey's board on Sept. 23.
Couche-Tard, which operates more than 5,800 stores in North
America, has nominated its own slate of candidates in the hopes
of swaying investors to their bid.
"It's going to come down to price at this point," Dley
"I think Casey's is one of the premium, if not the premium
operator in the U.S. ... the acquisition does make sense from a
fundamental view in a lot of different ways."
(Additional reporting by Isheeta Sanghi in Bangalore and Pav
Jordan in Toronto; editing by Peter Galloway and Rob Wilson)