Casey's General Stores, under pressure from JCP Investment Management, is eyeing Kroger's convenience-store business, sources say.
Kroger's more than 780 convenience stores could be valued at roughly $2 billion, sources say.
The auction comes as the still-fragmented industry is set upon a course of consolidation.
Casey's General bids for Kroger's convenience stores Casey's General bids for Kroger's convenience stores
14 Hours Ago | 00:46
Casey's General Stores, under pressure from activist investor JCP Investment Management, has submitted an initial bid for Kroger's roughly $2 billion convenience-store business, sources familiar with the situation tell CNBC.
JCP Investment Management in January called for the Ankeny, Iowa-based convenience store operator to explore strategic alternatives, including a potential sale. Buying Kroger's convenience-store business could stave off pressure to sell, sources say. Casey's in 2010 successfully fended off a hostile bid from larger peer Alimentation Couche-Tard.
JCP, along with BLR Partners and Joshua Schechter, collectively own $45 million of Casey's common stock, as of Jan. 3. Casey's has a market capitalization of $4.6 billion.
Kroger announced in October it was exploring strategic alternatives for its more than 780 convenience stores, which operate under names such as Kwik Shop, Turkey Hill and Tom Thumb. It said it is working with Goldman Sachs on the potential sale.
Casey's, which is working with an investment bank, is one of several parties looking to buy the stores and may not ultimately be the victor. Final offers in the sale process are due in early February, the sources said.
The sources requested anonymity because the information is confidential. Casey's declined to comment.
Casey's has been a relatively quiet acquirer when compared with its peers that have driven the consolidation of a still-fragmented industry. Last year, Canada's Couche-Tard bought CST Brands for roughly $4.4 billion. Earlier this month, 7-Eleven parent Seven & i Holdings completed its roughly $3.3 billion acquisition of 1,030 stores from Sunoco.
Still, Casey's CEO Terry Handley recently told analysts it would "further augment unit growth with acquisition opportunities."
Shift to convenience
The number of U.S. convenience stores was at a record 155,000 in the second half of last year, up 55 percent over the last three decades, according to Nielsen.
While traditional grocery stores are under pressure to cut prices amid increased competition, convenience stores have been able to take advantage of their accessibility and charge their customers more.
They have also begun to focus on broadening their offerings, selling more fresh food and even makeup.
Still, as the model succeeds, it brings with it new competition. Supermarkets and big-box retailers are now also focusing on small, conveniently located stores.
Though the number of convenience stores has grown, they remain under a disparate set of owners, leaving room for consolidators to look for efficiencies of scale. 7-Eleven is the biggest player, according to research firm IBIS World, with roughly 9,700 stores in the U.S. and Canada. Couche-Tard has 7,200 stores in the U.S. across 41 states. Casey's has more than 2,000 locations in the U.S., mostly in the Midwest.
Lauren Hirsch
Retail Reporter for CNBC.com
https://www.cnbc.com/2018/01/26/caseys-explores-buying-kroger-convenience-stores-valued-at-2-billion-amid-pressure-from-activists.html
#businessfinance @Business_Corpus https://bcorpus.blogspot.com/
Casey's Eyes Kroger's Convenience Stores as Activist Hovers
Under pressure from a group of activists including James Pappas, Casey's General Stores Inc. (CASY) has reportedly submitted a bid to buy Kroger Co.'s (KR) convenience store business, a move that has sent both grocers' share prices upward late Friday.
According to a report by CNBC, Pappas' investment fund, JCP Investment Management, in January urged Casey's, an Iowa-based convenience store chain, to explore strategic alternatives including a sale. The Kroger convenience stores are valued at $2 billion, the report said.
A purchase of Kroger's convenience store business could act as a poison pill on JCP Investment's campaign because a larger Casey's that is still integrating an acquisition would be much harder to sell. In 2010, Casey's successfully fended off a hostile bid from Alimentation Couche-Tard.
JCP Investment and BLR Partners as well as Joshua Schechter, together own $45 million of Casey's shares, according to the report. Schechter recently was involved in an activist campaign at CDI Corp. (CDI) and he cut his teeth in the early 2000s working at Warren Lichtenstein's activist fund Steel Partners.
The move comes after Kroger said in October it was looking at strategic alternatives for its more than 780 convenience stores. The company is reportedly working with Goldman, Sachs & CO. on the review. Kroger's shares dropped precipitously last year after Amazon.com (AMZN) agreed to buy Whole Foods in an industry transformative deal that emerged under pressure from another activist, Jana Partners' Barry Rosenstein.
Casey's shares spiked up to 3% to $127.73 a share on the news. Kroger shares, which have recovered somewhat after the Amazon-Whole Foods deal, were up 2% to $30.88 on the report.
https://www.thestreet.com/amp/story/14464492/1/casey-s-eyes-kroger-s-convenience-stores-as-activist-hovers.html
Casey's bids for Kroger convenience stores: CNBC
(Reuters) - Casey's General Stores Inc (CASY.O) has submitted an initial bid for Kroger Co's (KR.N) roughly $2 billion convenience-store business, and a deal could help the company stave off pressure from activist investors to sell itself, CNBC reported on Friday.
Casey's, which is working with an investment bank, is one of several parties looking to buy the stores and may not ultimately strike a deal, CNBC said, citing sources familiar with the matter. (cnb.cx/2nekVBR)
Kroger, the No. 1 U.S. supermarket operator, said in October it was exploring the sale of its nearly 800 convenience stores and CNBC said final offers are due in early February.
Kroger and Casey were not immediately available for comment.
Casey's shares closed up 2.7 percent at $127.73. Kroger shares closed up 2 percent at $30.88.
JCP Investment Management, BLR Partners and Joshua Schechter in January asked Casey's to explore strategic alternatives, including a potential sale, saying the stock was undervalued.
The three had a stake of about 1 percent in Casey's, which they valued at about $45 million, as of Jan. 3.
JCP had said Casey's has significantly underperformed industry leader Alimentation Couche-Tard Inc (ATDb.TO) since it rejected ATD's buyout offer in 2010, and has also lagged Murphy USA Inc since Murphy became an independent company in 2013.
Kroger has hired Goldman Sachs to help sell its 784 Tom Thumb, KwikShop, QuickStop and other stores that generate $4 billion in annual sales. It is seeking to focus on its online businesses amid rising competition.
The convenience store space has seen a number of deals in the past year, with Canada's Couche-Tard a major acquirer. Last year, the company bought CST Brands for roughly $4.4 billion as well as two smaller gas-and-convenience store chains.
Earlier this month, Seven & i Holdings (3382.T), the parent of the 7-Eleven network of stores, completed its roughly $3.3 billion acquisition of 1,100 stores from Sunoco LP (SUN.N).
https://uk.mobile.reuters.com/article/amp/idUKKBN1FF2SH
https://bcorpus.blogspot.com/2018/01/caseys-explores-buying-kroger.html
#businessfinance @Business_Corpus https://bcorpus.blogspot.com/
No comments:
Post a Comment