Canadian convenience retailer Couche-Tard’s ongoing aggressive pursuit of Casey’s General Stores has received support from a major shareholder in its US target.
ClearBridge Advisors, which holds a 2% stake in the company, has filed a letter with the US Securities and Exchange Commission, recommending the company stop opposing Couche-Tard and pursue a deal.
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“We urge the management and board of directors of Casey’s to engage in a formal negotiation with the management team of Alimentation Couche-Tard with respect to their US$36 cash offer to acquire 100% of the outstanding shares of Casey’s,” the letter said. “Anything less gives the impression that independence, not the maximisation of shareholder value, is the board’s highest priority.”
In the SEC filing, ClearBridge said it agreed that Casey’s stock is undervalued at Couche-Tard’s offer of US$36 a share. “We agree that the offer does not adequately capture the full earnings power and potential of Casey’s when optimally capitalised. We also believe that the offer does not account for the revenue synergies and cost savings created though a combination of Casey’s and Couche-Tard,” it added.
However the letter added that it is the duty of Casey’s management and the board to negotiate in good faith and act in the best interest of shareholders and that the board’s “intransigence” discourages a higher offer and could result in shareholder wealth destruction should the offer be withdrawn or not accepted by shareholders.
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