7-Eleven Joins Bidding for Casey’s
The previously unidentified "strategic third party" to
make an offer for Casey’s General Stores turns out to be 7-Eleven.
According
to The Wall Street Journal, privately-held 7-Eleven Inc.
has offered $40 a share to acquire the smaller convenience store chain, topping
the $38.50 previously offered by Alimentation Couche-Tard.
Casey’s considers
both bids to be inadequate but reports suggest it is open to talks with 7-Eleven
despite its defensive response to Couche-Tard to date. Couche-Tard
operates convenience stores under its own banner in Canada as well as the Circle
K and Mac’s chains in the U.S.
"Couche-Tard has met its match," Ben Brownlow, analyst with Morgan
Keegan & Co., told The Globe and Mail. "I would say that 7-Eleven
at this point wants it more, given that their opening offer is $40."
Couche-Tard,
which has nominated eight individuals to replace Casey’s entire board, was
critical of the announcement.
"We believe this is another maneuver orchestrated by the Casey’s board
to artificially inflate its stock price leading up to the shareholder vote," Couche-Tard
said in a statement.
Discussion Question: Does a deal with Alimentation Couche-Tard, 7-Eleven,
or staying independent make the most sense for Casey’s General Stores going forward?
If they keep taking the share price up it will end up making the most sense for Casey’s equity holders. Beyond that, the board probably doesn’t care.
Don’t know who will ultimately control Casey’s, but what most people don’t realize is the board’s obligation under Iowa law. Unlike most legislation governing takeover attempts, the Iowa statute requires that the board consider not only the shareholders interests but those of the communities of interest. This includes the employees, suppliers, charities, etc.–all those that would be impacted by a change in ownership.
Not sure I have the exact legal definition right but the concept is that they are bound to consider more than just the share price when making a decision. Part of what each of the two contenders has to do is present how they would handle this aspect of the process.
Stay independent! Casey’s still at bat and it’s winning its game.
The only thing that matters is what is good for the stock holders at this point.
In the discussion yesterday I referenced the impact of Iowa law on the Casey Board’s decision making process. The NY Times published an article on the difference between Delaware law and that of Iowa on their decision making process. Here is a link to that article.
It does not matter what anyone here thinks other than Casey’s major stockholders. If Casey’s keeps control of the bidding, we know who the winners will be.