Canadian c-store giant Alimentation Couche-Tard is calling on Casey’s General Stores to discuss its bid, as the Iowa-based chain moves to instead thwart the hostile acquisition, the Globe and Mail reported.
“A meeting would be more productive than putting roadblocks, like a poison pill, in the path of our compelling proposal,” Couche-Tard said in a statement.
Casey’s informed U.S regulators it is adopting a complicated shareholders rights agreement that could spoil Couche-Tard’s acquisition efforts. Such “poison pill” defenses usually aim to make a takeover too expensive by flooding the market with shares.
Casey’s plan would go into affect when any shareholder obtained 15% of the company and would give all Casey’s shareholders except the “acquiring person” the right to purchase new stock at half the market price, the Globe and Mail reported. In connection with the rights agreement, Casey’s plans to designate a new series of preferred shares.
Casey’s plans come after Couche-Tard disclosed a $1.9-billion (U.S.) bid for Casey’s, which the company rejected. Couche-Tard offered $36 per share for Casey’s shares and threatened to take its fight directly to shareholders if the board continued to reject negotiations.
Couche-Tard said it may seek to replace Casey’s existing board at the company’s annual meeting in September. The deadline for nominations is June 22.
Couche-Tard currently operates about 5,700 outlets under the Couche-Tard, Mac’s, Circle K, 7-jours, Dairy Mart, Daisy Mart, Beckers and Winks banners. If it acquires Casey’s, it would add some 1,500 stores to its North American retail network and get access to Casey’s $153 million in cash on its balance sheet.
“This poison pill is likely to delay the transaction and increases the probability that Couche-Tard will have to raise its offer price to conclude a transaction,” Desjardins Securities analyst Martin Landry told the Globe and Mail. Landry said he expects the transaction to be successful after both sides reach an agreement. The current defensive tactic gives Casey’s board of directors more time to react to Couche-Tard’s non-solicited offer and implies Couche-Tard will have to hammer out a deal to be successful, he wrote in a report.