A Third Investor Sues Casey’s

Casey’s General Stores Inc. now faces three lawsuits from investors, who demand the chain stop its defensive tactics and negotiate the hostile bid by Alimentation Couche-Tard Inc, The National Post reported.

The most recent suit, came last week-a class-action petition filed in Iowa, by the Kentucky State District Council of Carpenters Pension Trust Fund. It alleges Casey’s board members breached their fiduciary duty to shareholders through “disproportionate, draconian and preclusive defensive measures” that have hurt investors.

“The board’s refusal to negotiate in good faith and present the company’s shareholders an opportunity to fairly consider Couche-Tard’s offer is causing substantial harm to Casey’s shareholders,” the suit said. “These [individual directors] have demonstrated a course of action consistent only with their self-serving motives-namely creating barriers to a change of control in order to ensure that they will retain their prestigious and lucrative positions with the company.”

The Carpenters Pension Trust alleges that instead of engaging in talks with Couche-Tard, the board of Casey’s created a number of roadblocks to ward off the Quebec company’s approaches, including a “poison pill” shareholder rights agreement adopted in April. The Pension Trust also takes issue with Casey’s 10¢ dividend announced on June 15, saying it is out of line with previous dividends and “designed to make the company less attractive to potential suitors by reducing its cash on hand,” The National Post reported.

The legal action is one of three suits filed against Casey’s related to Couche-Tard. The others, also class action complaints, assert claims for breach of fiduciary duty. One seeks an order requiring the Casey’s board to put the company up for auction. The other seeks an order requiring the board to evaluate other deals.

Casey’s this week said the claims are without merit and that it intends to defend itself against them. None of the allegations have been proven.

Last week, Casey’s board unanimously rejected Couche-Tard’s latest offer of US$36.75 per share, saying it undervalues the company. Casey’s said it would buy back about one quarter of its stock for between US$38 and US$40 per share in a move to increase value for shareholders.

“[They found] a big bat” to stave off suitors, RBC Capital Markets analyst Irene Nattel said in a reseach note, The National Post reported. “The next move must come from [Couche-Tard]: Walk away or raise the offer to above US$38 to $40.”

 

 

 

 

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