A Couche-Tard storeJohn Morstad/The Globe and Mail
A long-term shareholder of Casey's General Stores Inc. has urged the convenience store operator to enter negotiations with Alimentation Couche-Tard Inc. to get a better price for the Iowa-based company.
In a letter to Casey's board of directors, ClearBridge Advisors said the chain's continued refusal to meet with the Montreal-area based hostile bidder gives the impression that "independence, not the maximization of shareholder value" is the board's highest priority.
"We urge the board of directors to reconsider its position with regard to the Couche-Tard tender and negotiate in good faith for the benefit of all shareholders," said the letter filed Monday with U.S. securities regulators.
ClearBridge, which has $54.9-billion (U.S.) of assets under management, owns 810,739 Casey's shares.
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The company said Casey's management has built a quality company with good long-term growth prospects.
Couche-Tard has offered $36 per share to buy Casey's in a deal valued at nearly $1.9-billion.
"We agree that the offer does not adequately capture the full earnings power and potential of Casey's when optimally capitalized," said the letter signed by five lead members of ClearBridge.
"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.
Couche-Tard senior management reaffirmed its willingness to negotiate with Casey's during a meeting with ClearBridge on June 4.
North America's second-largest convenience store operator is making the rounds with Casey's investors as it takes it hostile takeover directly to shareholders, including the election of its slate of directors.
It is also engaged in a string of lawsuits with Casey's over the offer, Iowa business law and Casey's claim that its suitor engaged in stock manipulation by failing to disclose that it earned $10-million in profit after selling its Casey's shares.
Couche-Tard declined to comment Monday on the ClearBridge letter or its claim that the offer price is too low.
ClearBridge said Casey's has a fiduciary duty to negotiate in good faith and in the best interest of all shareholders.
Discussion doesn't restrict the board from rejecting Couche-Tard's offer or any subsequent alternative, said the letter.
"Conversely, the board's intransigence discourages a higher offer and could result in shareholder wealth destruction should the Couche-Tard tender offer be withdrawn or not accepted by shareholders," said the investors.