Casey’s General Stores to expand empire with stunning $1.1bn acquisition of Fikes Wholesale

Casey’s General Stores, Inc., a leading convenience store chain in the United States, has announced a major acquisition, agreeing to purchase Fikes Wholesale, Inc. for $1.145 billion in an all-cash deal. The purchase price, which includes tax benefits valued at approximately $165 million, results in a net after-tax cost of $980 million. This strategic move will significantly expand Casey’s footprint and market presence.

Expansion and Strategic Value of the Acquisition

Fikes Wholesale, owner of CEFCO Convenience Stores, started as a single filling station in Cameron, Texas in 1952 and has grown into a prominent operator with a significant presence in several states. The acquisition will add 198 retail stores and a dealer network to Casey’s portfolio, bringing its total number of stores to nearly 2,900. This includes 148 new stores in Texas, a critical market for Casey’s, as well as 50 additional locations in Alabama, Florida, and Mississippi. The deal also includes a fuel terminal and a commissary to support the Texas stores.

Casey’s Growth Strategy and Financial Outlook

Darren Rebelez, Board Chair, President, and CEO of Casey’s, stated that the acquisition aligns with the company’s growth strategy, which was outlined during their Investor Day presentation in June 2023. He emphasized that this deal will accelerate Casey’s unit growth plan with high-quality assets, enhancing their presence in Texas and the southern region of the United States. Rebelez also noted that the acquisition is expected to be accretive to Casey’s EBITDA in the current fiscal year, contributing to both near-term and long-term shareholder value.

Fikes’ Strategic Alignment and Employee Impact

Raymond Smith, President of Fikes and CEFCO, expressed enthusiasm about the acquisition, highlighting the strategic alignment between the two companies. Smith noted that Casey’s reputation and shared values make it an ideal steward for CEFCO stores. The acquisition is expected to bring Casey’s pizza offerings to CEFCO locations and create new professional opportunities for Fikes employees.

Financial Details and Expected Synergies

The transaction will be financed through Casey’s balance sheet cash and bank financing. The net investment of $980 million reflects an approximate multiple of 11 times CEFCO’s pro forma adjusted 2023 EBITDA. Casey’s anticipates achieving approximately $45 million in annual run-rate synergies, particularly through kitchen installations in the acquired stores.

Regulatory Approval and Closing Timeline

The acquisition is expected to close in the fourth quarter of calendar year 2024, subject to customary closing conditions and regulatory approvals. Casey’s has engaged BMO Capital Markets Corp. as its financial advisor, Paul, Weiss, Rifkind, Wharton & Garrison LLP as legal counsel, and Cleary Gottlieb Steen & Hamilton as antitrust legal counsel. Fikes has been advised by BofA Securities and Bourland, Wall & Wenzel, P.C.