Casey's General (NASDAQ:CASY) Stores, Inc. (NASDAQ: CASY), a leading chain in the U.S. convenience store market, has announced its plans to acquire Fikes Wholesale, Inc., the owner of CEFCO Convenience Stores, for $1.145 billion in an all-cash transaction.
The deal, which includes tax benefits valued at approximately $165 million, results in a net after-tax purchase price of $980 million.
The acquisition, expected to close in the fourth quarter of 2024, will add 198 retail stores and a dealer network to Casey's operations, expanding its presence into Texas and the southern states of Alabama, Florida, and Mississippi.
The move will grow Casey's store count to nearly 2,900 and is seen as a strategic step to enhance its market position in these regions, the company said in a release on Friday.
Fikes Wholesale started its operations in 1952 as a single filling station in Cameron, Texas. Over the years, it expanded operations to multiple states. The acquisition by Casey's is anticipated to be accretive to the company's EBITDA in the current fiscal year, with an expected $45 million in annual run-rate synergies following kitchen installations in the acquired stores.
"This acquisition will allow Casey™s to accelerate our unit growth plan with high-quality assets that, along with our recent 22 store acquisition in northern Texas, will provide an expanded presence in Texas and allow us to continue to expand in the state and region," said Darren Rebelez, President and CEO of Casey's.
The transaction, which is subject to customary closing conditions and regulatory approval, will be financed through balance sheet cash and bank financing. The investment reflects an approximate multiple of 11 times CEFCO's pro forma adjusted 2023 EBITDA.
Casey's, a Fortune 500 company, is known for its freshly prepared foods, quality fuel, and friendly service, operating as the third-largest convenience store retailer and fifth-largest pizza chain in the U.S. The addition of CEFCO stores is expected to further strengthen its market presence and create value for shareholders, team members, and guests.
InvestingPro Insights
As Casey's General Stores (NASDAQ:CASY) gears up for its strategic acquisition of Fikes Wholesale, Inc., it's essential to consider the financial metrics and market performance that underpin the company's investment case. Casey's has a track record of consistent dividend growth, having raised its dividend for 24 consecutive years, signaling a commitment to returning value to shareholders. Additionally, the company has maintained dividend payments for 35 years, further cementing its reputation for financial stability.
InvestingPro Data reflects Casey's robust market position with a Market Cap of $13.83 billion and a P/E Ratio of 27.5, which aligns with its long-term growth narrative. The company's Revenue Growth for the last twelve months as of Q4 2024 stands at -1.53%, but its quarterly growth shows a positive trend at 8.15%. Furthermore, with a Gross Profit Margin of 22.53%, Casey's demonstrates its ability to maintain profitability amidst competitive market conditions.
InvestingPro Tips also highlight that analysts predict the company will be profitable this year, which is corroborated by a strong return over the last three months, with a 16.64% total return. While six analysts have revised their earnings downwards for the upcoming period, the company's solid financial history and the strategic nature of the CEFCO acquisition could provide a counterbalance to near-term earnings pressures.
For readers looking to delve deeper into Casey's financials and market outlook, InvestingPro offers additional insights and tips. There are 11 more InvestingPro Tips available, which could provide further clarity on the company's valuation and future prospects. Interested investors can explore these tips and utilize the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
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