Couche-Tard slams Casey’s “poison pill” takeover defence

Posted by Josette Dunn on 16th August 2010

Canadian c-store retailer Couche-Tard has hit out at the “outrageous” tactics of US takeover target Casey’s General Stores, which has secured financing for a share buyback in a bid to stay independent.Couche-Tard said Casey’s move to buy US$500m of its own shares at up to $40 a share would transfer value from the US retailer’s shareholders to the those providing the financing for the buyback.

The Canadian group, which has tabled an offer for Casey’s worth $36.75 a share, said the US convenience retailer’s agreement with the noteholders providing finance for the buyback included certain penalties. Couche-Tard said the penalties are invoked if, for instance, a party buys over 35% of Casey’s – or the US firm’s shareholders decide to replace a majority of its board.

“The Casey’s board and management are trying to take the decision regarding the future of the company away from the Casey’s shareholders by putting this expensive ‘poison put’ in place,” Couche-Tard said yesterday (12 August).

Couche-Tard’s criticism of Casey’s “poison pill” tactics represented a change in tone from the Canadian retailer. So far, the company has merely expressed “disappointment” that Casey’s has rejected its overtures and refused to enter into negotiations.

Instead, Couche-Tard has decided to turn up the rhetoric in a bid to put more pressure on the Casey’s board and convince the US retailer’s shareholders that its bid remains in the best interest of the business.

The Casey’s leveraged recapitalization plan is designed to financially engineer a temporary and artificial increase in Casey’s stock price, without increasing fundamental value to the Casey’s shareholders,” Couche-Tard said.

“It is a pretext for installing a coercive financing arrangement with a “poison put” mechanism designed to impede any takeover attempt. The actions taken by Casey’s signal that it is unable to effectively deploy capital to create sustainable and profitable growth and value.”

Couche-Tard added: “The shareholders of Casey’s deserve a board and management team that will act in the best interests of the Casey’s shareholders.”

However, the Casey’s board is showing no sign of backing down and, in a letter to shareholders, president and CEO Robert Myers defended the buyback plan.

Myers said the recapitalisation would “generate significant value” for Casey’s shareholders.

The Casey’s chief also again hit out at Couche-Tard’s offer and said the US firm’s “continuing strong performance and strategic growth initiatives will deliver you far greater value than Couche-Tard’s lowball offer”.

Myers also urged shareholders to re-elect Casey’s directors at the company’s AGM on 23 September. Couche-Tard has nominated nine candidates to sit on the Casey’s board.

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