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ANEKENY, Iowa -- Casey's General Stores Inc., a convenience store chain based here, sent another letter to its shareholders from company's President and Chief Executive Officer Robert J. Myers, urging shareholders to vote for its nominees to the board of the Midwest retailer.
The letter comes ahead of Casey's annual meeting of shareholders, to be held Sept. 23, during which Alimentation Couche-Tard plans to nominate for election its own slate of directors, as part of its hostile takeover attempt of Casey's General. Couche-Tard already filed proxy statements with the Security and Exchange Commission (SEC) regarding its nominees.
The letter, titled "A Vote 'For' Casey's Nominees is a Vote for Value," notes that Casey's nominated its current board of directors for reelection, and those eight members -- seven of which are independent directors -- "has led Casey's to become a best-in-class operator that consistently outperforms its peers and returns significant value to shareholders."
The letter continues: "Under the board's leadership, Casey's is executing well on its strategic growth initiatives and creating and delivering far greater value than Alimentation Couche-Tard Inc.'s $36.75 per share offer. Couche-Tard's proposal to replace our highly qualified, experienced directors with its hand-picked nominees has one purpose -- a quick sale of Casey's to Couche-Tard at a low price."
It adds that shareholders are urged to vote using the white proxy cards in support of nominees, and that any blue proxy cards received from Couche-Tard should be discarded.
Myers' letter states that the current board has driven the chain to consistently outperform its convenience store industry peers and the S&P 500. Over the past three years prior to the April 9, 2010 announcement of Couche-Tard's offer, Casey's stock price increased 24 percent, compared to its peers, which on average are down 46.3 percent, and the S&P 500, which is down 17.9 percent over that same period, according to the company.
Citing the company's shareholder returns since 2001, which averages 13 percent for each of those years, Myers wrote that the results reflect the board's commitment to increasing the company's dividend.
"Analysts recognize that through the execution of our ongoing strategic growth initiatives and our recapitalization plan, Casey's is worth more -- and is already delivering more value -- than Couche-Tard's lowball offer," Myers wrote in the letter to shareholders. "The eight analysts who currently cover the company have price targets for Casey's ranging from $39 per share to $50 per share. Despite these indications of the superior value of Casey's and the fact that only 12 percent of Casey's shares had tendered into Couche-Tard's offer as of Aug. 2, Couche-Tard has stated very clearly that it does not value Casey's at more than $38 per share."
Myers continued: "Your board is already delivering more value than Couche-Tard's small 16 percent premium. The continuously increasing equity research analyst EPS estimates for Casey's for fiscal 2011 and 2012 evidence this fact. Since Couche-Tard's offer on April 9, 2010 and our announcement of Casey's fiscal 2010 financial results (and prior to the announcement of our recapitalization), the consensus analyst EPS estimates increased for 2011 from $2.26 to $2.48 (9.7 percent) and for 2012 from $2.55 to $2.78 (9.0 percent)."
Regarding allegations that the Casey's board of directors was not acting in shareholders' best interests, Myers wrote that the company has a history of transparency and good governance, evidence of which is it being recognized for the last two years by Forbes.com as one of the 100 most "trustworthy companies" in the United States.
"Make no mistake, Couche-Tard is attempting to replace your board with its hand-picked slate of directors to achieve one purpose: a quick sale of Casey's to Couche-Tard at a low price. To that end, Couche-Tard continues to make misleading statements about Casey's board in an attempt to distract you from the inadequacy of its offer," Myers wrote to shareholders, adding: "Given Couche-Tard's lowball offer, its statements and actions that clearly demonstrate it is not a buyer of Casey's above $38 per share, and its questionable behavior -- including its allegedly manipulative sale of Casey's shares -- our board concluded that there is no basis for discussions with Couche-Tard regarding its $36.75 per share offer."
Responding to Couche-Tard's suggestion that Casey's recapitalization plan was engineered to artificially inflate its stock price, while also including terms that would entrench its current board, Myers said the recapitalization implements the board's decision to create a more efficient and lower-cost capital structure, which will boost returns to equity holders for the remainder of fiscal years 2011, 2012 and for years to come.
"Our objective in seeking financing for the recapitalization was to obtain the lowest borrowing cost possible. The terms of the private placement were the result of negotiations toward that goal, and we are pleased to have achieved that goal with the 5.22 percent rate -- the lowest in the company's history, and secured favorable covenants to enable Casey's to continue to execute on its strategic plan," Myers wrote. "The fact is noteholders requested a change in control 'make whole' premium in the terms of the financing as a direct result of Couche-Tard's hostile offer. We don't believe we could have secured this very attractive financing package without it. We believe that the terms of other financing options would have been less favorable for Casey's shareholders, and our commitment is to create value for our shareholders, not Couche-Tard's."
Myers also questioned Couche-Tard's ability to complete its offer for Casey's General, stating that more than four months after making its offer public, Couche-Tard still has not secured financing, while six events violate various conditions to its offer. Casey's also claimed Couche-Tard recently added a condition to its offer that is virtually incapable of fulfillment, "all of which effectively make Couche-Tard's offer illusory," the letter states.