August 31, 2010 / 12:30 PM / 7 years ago

UPDATE 3-Couche-Tard extends offer for Casey's to Sept 30

* Says about 1.1 pct of outstanding Casey’s shrs tendered

* Says terms of offer unchanged (Adds analyst’s comments, details. In U.S. dollars unless noted)

By Solarina Ho

TORONTO, Aug 31 (Reuters) - Canada’s Alimentation Couche-Tard Inc (ATDb.TO) said on Tuesday it was extending its $1.88 billion takeover offer for U.S. convenience store chain Casey’s General Stores (CASY.O) by a month.

The offer, which would have expired on Monday, will now end Sept. 30. All other terms and conditions of the offer are unchanged.

In July, Couche-Tard, Canada’s largest convenience store operator, sweetened its bid for Casey’s to $36.75 a share, or $1.88 billion. The hostile takeover fight has escalated since Couche-Tard made its initial $36 a share, or $1.85 billion, offer in April. [ID:nN31229554]

Couche-Tard said that as of Aug. 30, 546,435 Casey’s common shares, about 1.1 percent of all its outstanding shares, were tendered and not withdrawn pursuant to the offer.

“Even 1 percent is kind of a surprise,” said analyst Michael Broudo of Miller Tabak & Co.

Last week, Casey’s -- a U.S. Midwest chain that operates more than 1,500 stores -- concluded a $500 million recapitalization plan in which it agreed to buy back about 13.2 million shares at $38 a share.

“No one is going to tender into Couche-Tard at $36.75 when the company bought back stock at $38. They just did a Dutch tender, which had the impact of increasing earnings per share by 30 percent (by fiscal year 2012),” Broudo said.

    The buyback offer, designed to thwart the Couche-Tard bid, evoked a strong response, with 28.2 million shares -- more than 50 percent of its outstanding shares -- being tendered, Casey’s said. [ID:nN26185799]

    “Given that Casey’s is already creating more value than is reflected in the Couche-Tard offer ... we are not surprised that so few shares have tendered into Couche-Tard’s inadequate, highly conditional $36.75 per share offer,” Casey’s said in a statement on Tuesday.

    In a research note on Tuesday, Desjardins Securities analyst Martin Landry estimated the new cost of acquiring Casey’s would be about $38.90 a share, given the $500 million debt incurred from the recapitalization plan and the roughly $95 million change of control penalty embedded in Casey’s senior notes.

    Couche-Tard, which operates 5,800 stores across North America, is also fighting a proxy battle to replace Casey’s board at the annual shareholders meeting on Sept. 23.

    “I imagine they had to extend, just to save face and at least extend through the results of the annual meeting,” Broudo said. “I can’t imagine that they have a very good chance of winning any board seats right now.”

    Alimentation Couche-Tard shares were up 6 Canadian cents at C$23.02 on the Toronto Stock Exchange early on Tuesday afternoon. Casey’s General Stores was up 7 cents at $37.97 on the Nasdaq.

    $1=$1.06 Canadian Additional reporting by Isheeta Sanghi in Bangalore; editing by Peter Galloway

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