(Corrects timing of buyback announcement to July from April in
* 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 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
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
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
(Reporting by Pav Jordan; Editing by Frank McGurty, Peter
Galloway and Steve Orlofsky)