Casey's General Stores (CASY) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Fikes Wholesale Inc. and its 198 CEFCO large-format stores expands presence in Texas, Florida, Alabama, and Mississippi, accelerating execution of the three-year strategic plan and supporting regional growth.

• Adds a fuel terminal, dealer network, and commissary, enhancing fuel procurement, distribution, and operational efficiency.

• Stores are located in smaller towns and underpenetrated markets, complementing the existing distribution network and aligning with geographic strategy.

• CEFCO's established foodservice platform and well-invested assets align with growth and operational efficiency objectives.

• The deal supports the strategy to grow unit count, accelerate the food business, and strengthens competitive position in key Southern markets.

Financial terms and conditions

• Gross purchase price is $1.145 billion, including $165 million in tax benefits; net after-tax purchase price is $980 million.

• 2023 pro forma adjusted EBITDA for the acquired business is $89 million, with a purchase multiple of 11x pre-synergies and 7.3x post-synergies.

• Transaction funded through balance sheet cash and bank financing; pro forma leverage expected at 2.4x.

• $35 million in one-time deal and integration expenses expected, with $20 million at closing.

• $150 million planned for remodeling capital over 3-4 years to convert stores to the new format.

Synergies and expected cost savings

• $45 million in expected annual run-rate synergies, about 50% of acquired EBITDA, mainly from prepared foods, kitchen installations, procurement scale, and fuel procurement.

• Overhead and fuel synergies to be realized sooner; food and merchandising synergies to follow as stores are remodeled.

• Significant margin uplift anticipated from introducing higher-margin pizza program and leveraging self-distribution and foodservice capabilities.