CASEY’S ACQUIRES CEFCO CONVENIENCE STORES

The $1.1 billion deal will expand the company’s Texas footprint and add three new states to its operations.

Less than a year ago, Casey’s General Stores entered Texas by acquiring Lone Star Food Stores.

Today, the Ankeney, Iowa-based retailer made a bigger commitment to the state, agreeing to purchase Fikes Wholesale, owner of 198 CEFCO Convenience Stores.

The all-cash transaction totaled $1.145 billion. The purchase price includes tax benefits valued at approximately $165 million for a net after-tax purchase price of $980 million.

The proposed transaction will increase Casey’s footprint to nearly 2,900 stores.

The acquisition will bring 148 additional stores to Texas, which Casey’s describes as a “highly strategic market” for the retailer, as well as 50 stores in Alabama, Florida and Mississippi.

In addition to the retail stores and dealer locations, the transaction includes a fuel terminal and a commissary to support the Texas stores.

“During our Investor Day presentation in June of 2023, we outlined our business strategy to achieve top-quintile EBITDA growth.

One of the core pillars of the plan is to grow the number of units,” said Darren Rebelez, board chair, president and CEO of Casey’s, in a statement released by the company.

“This acquisition will allow Casey’s to accelerate our unit growth plan with high-quality assets that, along with [2023’s Lone Star acquisition], will provide an expanded presence in Texas and allow us to continue to expand in the state and region.”

Raymond Smith, president of Fikes and CEFCO, highlighted the strategic alignment between the two convenience organizations.

“The acquisition by Casey’s, especially given its reputation and shared values, is an exciting development for Fikes and our employees.

I am happy that the CEFCO stores will join a top convenience retailer that will reinvest in the stores and eventually bring Casey’s pizza to many of our customers as well as provide professional opportunities for our employees.

We believe Casey’s will be an excellent steward of the CEFCO experience that our loyal customers have come to expect.”

Rebelez added, “We expect the acquisition will create value for Casey’s shareholders in the near- and long-term and will be accretive to Casey’s EBITDA in the current fiscal year.

Fikes is a well-run and well-respected company in our industry, and we look forward to welcoming the Fikes team to the Casey’s family.

We could not be more excited about the future of our two organizations.”

The company plans to finance the transaction through balance sheet cash and bank financing.

The net investment of $980 million represents an approximate multiple of 11 times CEFCO’s pro forma adjusted 2023 EBITDA.

The company stated that it expects to achieve approximately $45 million in annual run-rate synergies upon the completion of kitchen installations in the acquired stores.

According to Casey’s, the transaction is expected to close during the fourth quarter of 2024, subject to customary closing conditions and regulatory approval.

Casey’s was advised by BMO Capital Markets Corp. as financial advisor, Paul, Weiss, Rifkind, Wharton & Garrison LLP as legal counsel, and Cleary Gottlieb Steen & Hamilton as antitrust legal counsel.

Fikes was advised by BofA Securities as financial advisor and Bourland, Wall & Wenzel P.C. as legal counsel.

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