ANKENY, Iowa -- The 22 Kum & Go stores in Iowa that Casey's General Stores Inc. has acquired from Kum & Go LC fit well with Casey's market strategy, and the stores will be immediately rebranded to Casey's once the transaction is completed. The companies did not disclose the deal's price tag.
The stores are located in Armstrong, Atlantic, Britt, Brooklyn, Carroll, Cedar Falls, Centerville (2), Chariton, Cherokee, Cherokee, Elk Run Heights, Estherville, Estherville, Garner, Iowa Falls, Mediapolis, Sheldon (2), St. Charles, Storm Lake and Washington, Iowa.
Casey's [image-nocss] will have to review the sites, but Brian Johnson, vice president of finance for Casey's, told CSP Daily News that he expected a "significant" amount of work was needed to get their proprietary foodservice offer into most stores, inclusive of buildouts or possible teardown and rebuilds. Though pizza is their flagship product, the sub sandwich, expanded coffee and baked good programs are also important profit centers.
Some overlap exists in towns that Casey's already operates in, so additional decisions on what programs get slotted into those stores will have to be made, he added.
As reported in a Morgan Keegan/CSP Daily News Flash on Friday, Kum & Go owner, president and CEO Kyle J. Krause said that the proceeds generated by this sale will be reinvested in Kum & Go's more than 400 remaining stores and used to drive the company's long-term business and growth strategies.
"I extend my sincere appreciation to our associates and loyal customers in these communities for the important role that they have played in Kum & Go's history and the overall success of these stores," said Krause.
Krause told The Des Moines Register that he approached Myers about the stores last fall after Casey's had successfully defused a hostile takeover by Canadian retailer Alimentation Couche-Tard Inc.
"Bob and I are together on a board, and I just approached him, knowing that they were doing transactions," Krause said.
Kum & Go will use profits from the sale for its own expansion, Krause said.
"We're doing predominantly new-store builds," Krause said, although he said his chain also continues to look at possible acquisitions.
"This year we will build about 25 stores; 15 will be new builds, 10 will be raze and rebuilds with larger floor plans," said Krause. "Next year, we'll end up doing about 30 stores--about 20 new and 10 rebuilds."In a statement announcing the deal with Kum & Go, Casey's president and CEO Robert J. Myers said, "These stores are predominantly in rural Iowa locations. These types of communities have proven to be an excellent fit for our business model, and we are very excited to implement our proprietary prepared food program."
Johnson told CSP Daily News,"Over half of our stores are in areas with populations of 2,500 or less," Johnson said. "This type of community is our bread and butter."
Commenting on Casey's growth-via-acquisition strategy, Johnson said currently it is tracking just above the company's stated goals of between 4% and 6%, noting that their philosophy has not changed. "We want to grow appropriately with a disciplined approach," he said.
Last year's hostile-takeover attempt by Laval, Quebec-based Couche-Tard has not altered Casey's internal pace regarding acquisitions. "We focus on slow growth and concentrating on locations that will be accretive, as this [latest purchase] will be," said Johnson.
(Click here for previous CSP Daily News coverage of the Casey's and Couche-Tard story.)
Casey's said that it expects this acquisition to be immediately accretive to earnings in their first full year of operation. The acquisition is subject to certain regulatory approvals and other customary closing conditions. The transaction is expected to close in July 2011 and will be funded by existing cash and cash flow.Ankeny, Iowa-based Casey's hasmore than1,600 stores in 11 Midwestern and Great Plains states: Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Oklahoma, South Dakota, Wisconsin and now Arkansas.Kum & Go, based in West Des Moines, Iowa, has more than 430 convenience stores in 11 states (Iowa, Arkansas, Colorado, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Dakota and Wyoming).
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.