How much is Casey's paying for the CEFCO acquisition?

The aggregate all-cash purchase price is $1.145 billion, subject to customary post-closing adjustments. Including tax benefits valued at approximately $165 million, the net after-tax price is about $980 million.

What assets are being acquired?

Casey's will acquire 100% of the equity of Fikes Wholesale, Inc. and Group Petroleum Services, Inc., which operate the CEFCO Convenience Stores. The deal includes 198 retail stores, a dealer network, a fuel terminal, and a commissary supporting the Texas stores.

How will the deal be financed and what is the valuation?

Casey's plans to fund the transaction with balance sheet cash and bank financing. Management cites an approximate 11x multiple of CEFCO's pro forma adjusted 2023 EBITDA on the $980 million net investment.

When is the transaction expected to close and what could delay it?

Closing is expected in the fourth quarter of calendar 2024. Conditions include expiration or termination of the HSR Act waiting period, accuracy of representations and warranties, performance of covenants in all material respects, and no material adverse effect on the Seller Companies.

CASY 8-K: Material Agreements & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed July 26, 2024. Cited figures are marked; the original filing is the authoritative source.

Casey's General Stores (CASY) has entered into an Equity Purchase Agreement dated July 25, 2024 to acquire 100% of the equity of Fikes Wholesale, Inc. and Group Petroleum Services, Inc. (owner of the CEFCO Convenience Stores brand) for an all-cash purchase price of $1.145 billion^a, subject to customary post-closing adjustments.

The transaction includes 198 retail stores and a dealer network, and would lift Casey's footprint to nearly 2,900 stores. The company states the purchase price includes tax benefits valued at roughly $165 million^b, implying a net after-tax price of about $980 million, which management says represents approximately 11x CEFCO's pro forma adjusted 2023 EBITDA. Strategically, the deal accelerates Casey's unit growth pillar and significantly expands its presence in Texas, adding 148 Texas stores, along with 50 stores in Alabama, Florida, and Mississippi.

The acquisition also includes a fuel terminal and a commissary supporting the Texas stores. Management expects approximately $45 million^c in annual run-rate synergies once kitchen installations are completed in the acquired stores, and states the deal will be accretive to EBITDA in the current fiscal year. Financing is planned through balance sheet cash and bank debt.

Closing is expected in the fourth quarter of calendar 2024, subject to HSR antitrust clearance and other customary conditions. Investors should weigh the accretion and synergy case against the substantial cash outlay, the integration risk of a large multi-state acquisition, and the execution required to convert the acquired stores to Casey's operating model and pizza offering. The filing itself contains no pro forma financial statements, so detailed balance sheet and leverage impacts are not yet quantified in this document.

02—Key points

Key Highlights

Agreement to acquire Fikes Wholesale and Group Petroleum Services (CEFCO Convenience Stores) for $1.145 billion in cash, or about $980 million net of approximately $165 million in tax benefits
Acquisition adds 198 retail stores and a dealer network, increasing Casey's footprint to nearly 2,900 stores
Deal implies roughly 11x CEFCO's pro forma adjusted 2023 EBITDA on a net basis, per management
Expected run-rate synergies of approximately $45 million annually upon completion of kitchen installations
Strategic expansion into Texas (148 stores) plus 50 stores across Alabama, Florida, and Mississippi, including a fuel terminal and commissary
Management expects the transaction to be accretive to EBITDA in the current fiscal year
Financing via balance sheet cash and bank financing; closing expected in Q4 2024 subject to HSR clearance and customary conditions

03—Questions

Frequently Asked Questions

How much is Casey's paying for the CEFCO acquisition?
The aggregate all-cash purchase price is $1.145 billion, subject to customary post-closing adjustments. Including tax benefits valued at approximately $165 million, the net after-tax price is about $980 million.
What assets are being acquired?
Casey's will acquire 100% of the equity of Fikes Wholesale, Inc. and Group Petroleum Services, Inc., which operate the CEFCO Convenience Stores. The deal includes 198 retail stores, a dealer network, a fuel terminal, and a commissary supporting the Texas stores.
How will the deal be financed and what is the valuation?
Casey's plans to fund the transaction with balance sheet cash and bank financing. Management cites an approximate 11x multiple of CEFCO's pro forma adjusted 2023 EBITDA on the $980 million net investment.
When is the transaction expected to close and what could delay it?
Closing is expected in the fourth quarter of calendar 2024. Conditions include expiration or termination of the HSR Act waiting period, accuracy of representations and warranties, performance of covenants in all material respects, and no material adverse effect on the Seller Companies.
What synergies and earnings impact does management expect?
Management expects approximately $45 million in annual run-rate synergies once kitchen installations are completed in the acquired stores, and expects the deal to be accretive to EBITDA in the current fiscal year.

04—Continue

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