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Casey’s explores buying Kroger convenience stores valued at $2 billion amid pressure from activists

Casey’s Unspecialized Stores, under pressure from activist investor JCP Investment Control, has submitted an initial bid for Kroger’s roughly $2 billion convenience-store firm, sources familiar with the situation tell CNBC.

JCP Investment Executives in January called for the Ankeny, Iowa-based convenience store operator to examine strategic alternatives, including a potential sale. Buying Kroger’s convenience-store responsibility could stave off pressure to sell, sources say. Casey’s in 2010 successfully fended off a anti bid from larger peer Alimentation Couche-Tard.

JCP, along with BLR Companions and Joshua Schechter, collectively own $45 million of Casey’s common staple, as of Jan. 3. Casey’s has a market capitalization of $4.6 billion.

Kroger disclosed in October it was exploring strategic alternatives for its more than 780 convenience accumulates, which operate under names such as Kwik Shop, Turkey Hill and Tom Thumb. It bring to light it is working with Goldman Sachs on the potential sale.

Casey’s, which is fashion with an investment bank, is one of several parties looking to buy the stores and may not at the last be the victor. Final offers in the sale process are due in early February, the origins said.

The sources requested anonymity because the information is confidential. Casey’s weakened to comment.

Casey’s has been a relatively quiet acquirer when rivaled with its peers that have driven the consolidation of a still-fragmented effort. Last year, Canada’s Couche-Tard bought CST Brands for roughly $4.4 billion. Earlier this month, 7-Eleven foster-parent Seven & i Holdings completed its roughly $3.3 billion acquisition of 1,030 stow aways from Sunoco.

Still, Casey’s CEO Terry Handley recently tattled analysts it would “further augment unit growth with gain opportunities.”

The number of U.S. convenience stores was at a record 155,000 in the second half of final year, up 55 percent over the last three decades, according to Nielsen.

While well-known grocery stores are under pressure to cut prices amid increased event, convenience stores have been able to take advantage of their accessibility and saturate their customers more.

They have also begun to blurry on broadening their offerings, selling more fresh food and plane makeup.

Still, as the model succeeds, it brings with it new competition. Supermarkets and big-box retailers are now also hub on small, conveniently located stores.

Though the number of convenience caches has grown, they remain under a disparate set of owners, leaving dwell for consolidators to look for efficiencies of scale. 7-Eleven is the biggest player, according to into firm IBIS World, with roughly 9,700 stores in the U.S. and Canada. Couche-Tard has 7,200 believe ins in the U.S. across 41 states. Casey’s has more than 2,000 turning ups in the U.S., mostly in the Midwest.

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