This time last year, Casey’s General Stores Inc. was in the midst of a hostile takeover defence to fend off bidder Alimentation Couche-Tard Inc.
Fast foward 12 months, and Casey’s stock has hit a new all-time high, all on its own.
Couche-Tard first approached Casey’s in October, 2009, and ultimately launched the hostile bid because it said management had done nothing to increase shareholder value, so a takeover was the only way for Casey’s shareholders to realize a big share premium in the near future. It turns out that wasn’t exactly the case. Over the last twelve months, Casey’s stock is up 27 per cent. (To be fair, Couche-Tard's stock is up 40 per cent over the same period.)
Of course, the market has rallied during that time, but it proves that the shareholders didn’t need a takeover to generate some returns. At the time of the hostile bid, Couche-Tard offered $38.50 (U.S.). The stock is now trading around $44.30.
Yet Casey’s run has had some wild swings. In March the stock plummeted all the way down to $36. It has since recovered, bolstered largely by strong fiscal year end results. Those came out earlier this week, and higher gas prices have been a good thing for Casey’s. On the back of this strength, the company increased its dividend from 54 cents to 60 cents, extending its track record of increases. The company’s payout ratio is now about 25 per cent, which is at the high end of its desired range.
Going forward, Casey’s has said it looks to continue picking up small independent stores and chains who have trouble with rising costs from things like rising credit card processing fees.
Couche-Tard’s battle for control of Casey’s was an ugly fight last summer. Couche-Tard tried to replace Casey’s board of directors, but after that attempt failed in September the company dropped its bid.
However, near the end of the battle, 7-Eleven entered the fray and offered $43 per share, only to back away in the end. Couche-Tard accused Casey’s of using 7-Eleven as a “smokescreen” right before the shareholder vote.