Casey’s responds to call for sale by investors
JCP Investment Management, BLR Partners LP and Joshua E. Schechter want Casey’s General Stores to explore alternatives, including a sale or merger, believing the company offer more value in a sale than as a standalone company.
The three firms, who collectively own approximately $45 million of Casey’s common stock, issued a biting open letter to the retailer’s shareholders, saying the company has “significantly” underperformed industry leader Alimentation Couche-Tard Inc. since Casey's decision to reject ATD's offer and remain independent in 2010. Casey's has also underperformed Murphy USA Inc. since Murphy became an independent company, according to the letter.
“Casey's no longer delivers best-in-class returns as measured by either operating metrics or share price performance,” the letter stated. “Casey's has missed earnings targets for seven straight quarters due in part to decelerating same store sales and bloated operational expenses.”
Casey’s wasted no time in issuing a reply to the letter, noting, among other things, that the three firms calling for the review collectively own approximately 1% of Casey’s outstanding shares. In a statement, the retailer said that its management met with representatives from JCP this past summer, and that they (JCP) did not raise their recommendation that Casey’s explore strategic alternatives, and there has been no substantive engagement with them since that time.
Casey’s also said it has a strong track record of delivering value for shareholders, saying that its five-year total shareholder returns (TSR) of 121% exceed the TSRs of the S&P 500 index (108%) and the S&P Retail index (46%) over the same period.
The letter from JCP also claims that Casey’s has expanded too fast. The company operates more than 2,000 stores in 15 states.
“We are concerned that Casey's store level returns on invested capital have declined as the company has gone from operating in nine states to 15 states,” the letter stated. “Prior to 2010 (before the offer from ATD), the company had only operated in nine states since 1995. We believe such rapid expansion coupled with seeming declining returns on invested capital is symptomatic of a company that has been unable to manage growth effectively.”
Terry Handley, president and CEO of Casey’s, said that the company is focused on generating increased long-term value for shareholders through new initiatives to accelerate same-store growth and returning cash to shareholders through share repurchases and a steadily increasing dividends.
“With the combination of the company’s growing acquisition pipeline, new store construction activity, new initiatives aimed at enhancing operations – such as digital engagement and price optimization projects – Casey’s expects to deliver substantial value for its shareholders,” he said.
The three firms, who collectively own approximately $45 million of Casey’s common stock, issued a biting open letter to the retailer’s shareholders, saying the company has “significantly” underperformed industry leader Alimentation Couche-Tard Inc. since Casey's decision to reject ATD's offer and remain independent in 2010. Casey's has also underperformed Murphy USA Inc. since Murphy became an independent company, according to the letter.
“Casey's no longer delivers best-in-class returns as measured by either operating metrics or share price performance,” the letter stated. “Casey's has missed earnings targets for seven straight quarters due in part to decelerating same store sales and bloated operational expenses.”
Casey’s wasted no time in issuing a reply to the letter, noting, among other things, that the three firms calling for the review collectively own approximately 1% of Casey’s outstanding shares. In a statement, the retailer said that its management met with representatives from JCP this past summer, and that they (JCP) did not raise their recommendation that Casey’s explore strategic alternatives, and there has been no substantive engagement with them since that time.
Casey’s also said it has a strong track record of delivering value for shareholders, saying that its five-year total shareholder returns (TSR) of 121% exceed the TSRs of the S&P 500 index (108%) and the S&P Retail index (46%) over the same period.
The letter from JCP also claims that Casey’s has expanded too fast. The company operates more than 2,000 stores in 15 states.
“We are concerned that Casey's store level returns on invested capital have declined as the company has gone from operating in nine states to 15 states,” the letter stated. “Prior to 2010 (before the offer from ATD), the company had only operated in nine states since 1995. We believe such rapid expansion coupled with seeming declining returns on invested capital is symptomatic of a company that has been unable to manage growth effectively.”
Terry Handley, president and CEO of Casey’s, said that the company is focused on generating increased long-term value for shareholders through new initiatives to accelerate same-store growth and returning cash to shareholders through share repurchases and a steadily increasing dividends.
“With the combination of the company’s growing acquisition pipeline, new store construction activity, new initiatives aimed at enhancing operations – such as digital engagement and price optimization projects – Casey’s expects to deliver substantial value for its shareholders,” he said.