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ANKENY, Iowa -- The board of directors of Casey's General Stores late last week approved a plan to prevent a hostile takeover of the Ankeny-based convenience store chain, which is currently a subject of interest of Canadian c-store company, Alimentation Couche-Tard Inc.
A shareholder rights agreement, filed with federal regulators late Friday afternoon, will go into effect if any one shareholder obtains 15 percent of the company. Once triggered, the agreement, among other things, gives all Casey's shareholders except the "acquiring person" the right to purchase new stock at one-half the market price, the Des Moines Register reported.
As of Friday, BlackRock Institutional Trust Co. was the company's largest single investor, holding roughly 7.1 percent, according to the report.
Bill Walljasper, Casey's chief financial officer, called the action "a very customary step in a hostile takeover," one that will create "a dilutive factor" and make a deal more expensive for any potential buyer. Walljasper declined to provide additional comments when contacted by CSNews Online.
The action comes one week after Couche-Tard revealed an attempt to purchase the Midwest convenience store chain with an unsolicited $36 per share bid, and Casey's board unanimously rejected the offer. When making the offer public, Couche-Tard hinted at pursuing a hostile takeover if negotiations were not possible.
"What this basically does is it prevents Couche-Tard from making any kind of a tender offer for Casey's shares," J. Justin Akin, senior equity analyst with River Road Asset Management in Louisville, Ky., said in the report. "It forces them to deal with Casey's board rather than Casey's shareholders."
The tactic generally is "pretty effective," he added, noting it also risks upsetting Casey's shareholders, who might wonder whether company management is more interested in shareholder value or protecting its own positions.
"Casey's management does have a lot of credibility, but this is going to raise a lot of eyebrows," Akin told the newspaper.
Couche-Tard responded to the shareholder right agreement, calling again for negotiations.
"Our senior management team and legal and financial advisors remain ready to meet with Casey's and its representatives at their earliest convenience to discuss our proposal in detail," a company spokesperson said in an e-mails statement. "A meeting would be more productive than putting roadblocks, like a poison pill, in the path of our compelling proposal." A company spokesman declined to provide more information when contacted by CSNews Online.
In other Casey's news, the company also reported its March 2010 same-store sales results for stores open for one full year. For prepared food and fountain, same-store sales increased 7.0 percent, while grocery and other merchandise increased 1.4 percent in March 2010 compared to March 2009.
Same store gasoline gallons sold were unchanged in March 2010, reversing a five-month trend of negative same store gallon movement, the company stated. The average retail price of gasoline sold during March 2010 was $2.65 per gallon, while margins were above the company's fiscal 2010 goal of 11.0 cents per gallon.
March results reflect improving same store sales trends, relative to the past five months, amidst more favorable weather, the company stated, noting it was pleased with the increase in the grocery and other merchandise category, specifically since it went against a strong March 2009 that saw significant cigarette manufacturer price increases prior to the April 1, 2009 federal excise tax increase, Casey's stated.
Prepared food and fountain same-store sales were the strongest in nearly a year, thanks to a meaningful impact from improved weather and strategic price increases, according to the company.
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