By Solarina Ho
TORONTO (Reuters) - Canada's Alimentation
Couche-Tard abandoned its $2 billion hostile takeover
bid for Casey's General Stores 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
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.
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.
(Reporting by Solarina Ho; Editing by Frank McGurty)