Alimentation Couche-Tard Offer to Acquire Casey’s General Stores June 2010 Exhibit (a)(5)(C) |
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2 Transaction highlights Consideration Premium and valuation Financing • All-cash offer at $36.00 per Casey’s share • Implies a total enterprise valuation of $1.9 billion • Implied multiples of 7.4x EV / LTM EBITDA and $1.3 million EV per store are above historical average multiples of 6.3x and $662 thousand for precedent c-store transactions • 24% premium to Casey’s pre-announcement 1-year average share price • 14% premium to Casey’s pre-announcement share price • Transaction not contingent on due diligence review • Financing through cash on hand, borrowings under existing credit facilities and new bank or bond financing |
3 Compelling strategic rationale • Creates largest independent corporate-store operator in North America with ~ 7,400 locations • Expands geographic footprint across North America • Enhances scale and efficiency • Uniquely positions Couche-Tard to generate more cash flow • Delivers immediate premium to Casey’s shareholders • Casey’s stakeholders become part of bigger organization with benefits of a decentralized business model empowering its employees |
4 1,000 4,396 383 1,387 1,649 1,598 1,507 900 386 527 7,100 1,487 4,596 3,367 3,601 428 1,302 498 8,100 7,390 5,883 4,639 4,144 3,984 1,815 1,649 1,598 1,507 1,305 900 884 527 43 777 5,903 1,487 7-Eleven Pro forma Couche-Tard Couche-Tard Shell ExxonMobil Chevron Valero Pantry Marathon Casey's ConocoPhillips Cumberland Farms Tesoro Susser Company-operated Affiliated / Franchises Creates the largest independent corporate-store operator in North America Source: Public filings / data, websites, press releases. Note: Most recent data as of June 1, 2010. (1) Denotes U.S. locations. (1) (1) (1) (1) |
5 Alimentation Couche-Tard at a glance • Largest independent convenience store operator in North America by company- operated stores • #1 Canadian convenience store operator • Alain Bouchard, CEO, started the chain in 1980 with one store • Strong network of 5,883 convenience stores in U.S. and Canada • Owns real estate for 1,300+ sites • Attractive in-store merchandise mix • Highly decentralized operations with less than 20 people at corporate offices • Strong financial performance in challenging economic environment • Focus on expense reduction and deleveraging • Management owns approximately 22% of the company Total stores – by geography Canada 35% US 65% Total stores – by channel LTM Sales LTM Gross profit Merchandise 37% Motor Fuel 63% Motor Fuel 23% Merchandise 77% Affiliated 25% Company 75% 5,883 stores 5,883 stores $15.4 billion $2.5 billion |
6 Couche-Tard has a large presence in the U.S. • 3,846 stores in the U.S. – 65% of total stores • Presence in 43 states and Washington D.C. • 8 out of 11 divisions in the U.S. • 36,000 employees out of 53,000 are in the U.S. – 68% of total • 79% of revenues come from U.S. divisions US 100% US 79% Canada 21% US 84% Canada 16% Couche-Tard Casey’s Pro-forma Couche-Tard Note: Based on LTM sales as of January 31, 2010. + = |
7 History of Couche-Tard IPO 34 Store Network 3rd Public Offering Acquired 245 Provi-Soir Stores and 50 Wink’s Stores Alain Bouchard Started the Chain with one store 2nd Public Offering 304 Store Network Entry into Ontario, Western Canada 976 Stores under Mac’s, Mike’s Mart and Becker’s Banners as part of Silcorp Acquisition Added to U.S. Midwest 287 Dairy Mart Stores 4th Public Offering Entry into U.S. Midwest 225 Bigfoot Stores as part of Johnson Oil Acquisition - Further Penetration of U.S. Midwest 92 Dairy Mart 43 Clark Retail Stores - Acquired Dunkin’ Donuts Quebec Master Franchise - Acquired Circle K, 2nd largest independent convenience store in U.S. Franchise agreement with Grupo Kaltex, S.A. de C.V. for 250 stores in Mexico within the next five years Acquisition of 236 sites from Shell Oil Products US and its affiliate Motiva Enterprises LLC Couche-Tard and Irving Oil Limited expand partnership to include 252 stores across Atlantic Canada and New England Couche-Tard offers to acquire Casey’s at $36.00 per share Added a total of 496 stores Acquisition of 43 company- operated and 444 franchises from Exxon Mobil |
8 2.3x 1.4x 0.8x 0.4x 1.5x 1.3x 1.0x 1.2x At Circle K transaction close 2004 2005 2006 2007 2008 2009 LTM Longstanding history of successful acquisitions and de-leveraging Couche-Tard rapidly de-leveraged following its successful acquisition of Circle K Total net debt / EBITDA Recent acquisitions Note: 2004 figures are pro forma for Circle K transaction. (1) Represents 50% interest in RDK Ventures LLC, a joint venture with Shell Oil Products US (100 stores). Couche-Tard already operated 32 of these stores prior to entering into the JV. Adjusted net debt / EBITDAR 3.7x 2.9x 2.5x 3.2x 3.2x 2.9x 3.0x 4.2x FYE April 2004 Banner # stores 2,279 43 Total 2,333 FYE April 2005 Banner # stores 21 Pump N Stop 19 Total 40 FYE April 2006 Banner # stores 53 Winners Banner 16 26 7 Total 102 FYE April 2007 Banner # stores All Star 53 Groovin Noovin 13 236 24 56 24 Spectrum Stores 90 Total 496 FYE April 2008 Banner # stores Sterling Stores 28 Others 18 Total 46 FYE April 2009 Banner # stores 7 Exploitation Quali-T 13 Spirit Energy 70 15 Others 2 Total 107 LTM Banner # stores 43 444 RDK joint venture (1) 50 Total 537 |
9 Enhanced store network International Locations: China, Guam, Hong Kong, Indonesia, Japan, Macao, Mexico, Vietnam Company operated: 4,396 Affiliated: 1,487 Total stores: 5,883 Owned real estate: 1,300+ locations Source: Company information. Note: Store count in each region as of January 31, 2010. Casey’s portfolio is geographically complementary to Couche-Tard Total stores: 1,507 IL IA MN MO NE SD WI IN 63 370 418 94 284 105 37 97 10 ND Casey’s retail footprint Couche-Tard’s retail footprint GREAT LAKES REGION Corporate stores: 459 Affiliated stores: 258 MIDWEST REGION Corporate stores: 423 Affiliated stores: 69 SOUTHEAST REGION Corporate stores: 267 Affiliated stores: 56 SOUTHWEST REGION Corporate stores: 225 Affiliated stores: 198 ARIZONA REGION Corporate stores: 626 Affiliated stores: 24 WEST COAST REGION Corporate stores: 163 Affiliated stores: 320 CENTRAL CANADA Corporate stores: 572 Affiliated stores: 203 WESTERN CANADA Corporate stores: 282 Affiliated stores: 0 EASTERN CANADA Corporate stores: 676 Affiliated stores: 304 FLORIDA REGION Corporate stores: 405 Affiliated stores: 4 GULF REGION Corporate stores: 298 Affiliated stores: 51 |
10 Combined company with enhanced scale and efficiency Merchandise sales / company-operated store Gasoline gallons / company-operated store 1,199 840 Couche-Tard Casey's ($ in 000) Merchandise margin Gasoline margin – cpg 32.9% 42.1% Couche-Tard Casey's 13.8¢ 13.7¢ Couche-Tard Casey's (Gallons in 000) $949 $1,375 Couche-Tard Casey's Note: Represent LTM figures as of January 31, 2010. U.S. operations only for Couche-Tard. Gasoline margins before deduction of credit card fees. |
11 $30.00 $32.00 $34.00 $36.00 Trading Value (Pre-Announcement) Offer Price Couche-Tard’s offer presents a compelling value for Casey’s shareholders • Couche-Tard’s all-cash offer of $36.00 per share represents: • 7.4x EV / LTM EBITDA and $1.26 million per store • 24% premium to Casey’s pre-announcement 1-year average share price and 9% premium to its pre-announcement all-time high share price • Immediate liquidity for Casey’s shareholders in an uncertain economic environment and removes any uncertainty with respect to future stock performance Immediate Shareholder Premium |
12 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 $0 $9 $18 $27 $36 Casey’s stock price performance since IPO Cash offer of $36 per share Source: FactSet Research Systems. Prior to Couche-Tard’s offer, Casey’s had never traded at or above $36 per share Casey’s stock price performance prior to Couche-Tard offer |
13 Couche-Tard’s offer is at a premium multiple to precedent c-store transactions 7.5x 5.1x 7.9x 5.1x 5.5x 8.6x 5.4x 5.8x 6.1x 6.6x Susser / Town & Country Wellspring Capital / Susser Green Valley Acquisition / Uni-Mart Couche-Tard / Circle K The Pantry / Golden Gallon (Ahold) Sunoco / Speedway SuperAmerica Uni-mart / Orloski Services Station Tosco / Exxon Apollo / Clark USA Tosco / Circle K Enterprise Value / LTM EBITDA Implied transaction multiple: 7.4x Average 6.3x Source: Public filings, press releases and research reports. Note: Purchase price multiple of the squeeze-out of 7-Eleven by its Japanese parent IYG Holding in 2005 is not included – not comparable as the purchase price included very valuable 7-11 licenses, plus 7-11 has a different model due to its high number of franchised stores. Announce date: 09/07/07 12/25/05 07/04/04 10/03/03 08/03/03 02/03/03 04/21/00 12/01/99 05/01/99 02/01/96 EV ($MM) $361 $277 $90 $830 $187 $140 $41 $860 $230 $921 LTM EBITDA $49 $54 $11 $163 $31 $25 $5 $160 $35 $159 ($MM) |
14 Couche-Tard’s offer is at a premium multiple to precedent c-store transactions (cont’d) Implied transaction multiple: $1,260 Average $662 Enterprise Value / Store ($ thousands) Announce date 12/25/05 07/04/04 10/03/03 08/03/03 02/03/03 04/21/00 12/01/99 05/01/99 02/01/96 EV ($MM) $277 $90 $830 $187 $140 $41 $860 $230 $921 No. of Stores 319 285 1,663 138 193 43 1,740 672 2,300 Source: Public flings, press releases and research reports. Note: Store count includes all stores regardless of owned vs. leased and operated vs. dealer. Purchase price multiple of the squeeze-out of 7-Eleven by its Japanese parent IYG Holding in 2005 is not included – not comparable as the purchase price included very valuable 7-11 licenses, plus 7-11 has a different model due to its high number of franchised stores. Susser / Town & Country EV/store multiple excluded from average as Town & Country stores generated significantly higher volume and profitability and therefore are not comparable to Casey's. $868 $315 $499 $1,355 $725 $494 $342 $400 $958 Wellspring Capital / Susser Green Valley Acquisition / Uni- Mart Couche-Tard / Circle K The Pantry / Golden Gallon (Ahold) Sunoco / Speedway SuperAmerica Uni-mart / Orloski Services Station Tosco / Exxon Mobil Apollo / Clark USA Tosco / Circle K |
15 Limited potential interlopers • Limited interest from other potential strategic buyers • Many potential strategic buyers lack the financial wherewithal for an all-cash offer • Couche-Tard has the most compelling strategic rationale for acquiring Casey’s due to complementary geographic presence and potential synergies • A financial buyer would not achieve adequate investment returns at a premium to Couche-Tard’s offer • No potential synergies – Casey’s is not a turn-around story; currently a well operated business • Historically hesitant to invest in C-store space given the volatility of the gas business • Limited capacity to monetize Casey’s real estate with a sale-leaseback transaction • Assuming aggressive revenue growth and EBITDA margins, sponsor returns are in the mid-to-high teens • Previous sponsor investments in C-store sector didn’t create value for the buyers |
16 Why has Couche-Tard commenced a tender offer? • Couche-Tard has repeatedly expressed its openness to working with Casey’s to negotiate a transaction, but Casey’s has refused • Couche-Tard believes shareholders should have the opportunity to decide on its offer for themselves • We believe Couche-Tard’s offer benefits Casey’s – Shareholders – Employees – Customers – Communities |
17 Financing considerations • This all-cash offer is expected to be funded through cash on hand, borrowings under existing credit facilities and new bank or bond financing • We believe financing commitments can be secured, as necessary • At transaction close, Couche-Tard is expected to have pro forma leverage of 3.3x debt/EBITDA and will generate significant free cash flow to reduce leverage substantially within two years |
18 Integration strategy Couche-Tard expects that: • Couche-Tard’s decentralized business model will allow it to run Casey’s as a stand-alone business unit • No significant capital expenditures will be required to integrate Casey’s • Casey’s store banner will remain in place (no re-branding / remodels required) and will continue to be grown as a rural store format in the U.S. Midwest region • There is a possibility to leverage Casey’s wholesale and distribution capabilities • There is a possibility to implement best practices from Casey’s and Couche-Tard |
19 Path forward Launch tender offer File HSR Nominate Directors to Casey’s Board Shareholder vote at Casey’s annual meeting Couche-Tard is committed to completing the transaction |
20 Appendix |
21 Casey’s relative trading performance Source: FactSet Research Systems. Note: C-Stores index includes Couche-Tard, Pantry and Susser. Casey’s stock price is not depressed relative to other convenience stores 30.6% (21.5%) (41.2%) (30.3%) 6/1/07 2/29/08 11/28/08 8/31/09 6/1/10 20 40 60 80 100 120 140 160 S&P 500 S&P Retail Casey's General Stores, Inc. C-Stores |