Casey’s General Stores Inc. has agreed to acquire Buchanan Energy, owner of Bucky’s Convenience Stores, in an all-cash transaction for $580 million, including tax benefits valued at $80 million for a net after-tax purchase price of $500 million.
Buchanan Energy and Bucky’s Convenience Stores were founded as a family-owned and operated business in 1980. The Omaha, Neb.-based company operates 56 locations in Illinois and 26 in Nebraska, as well as five in Iowa, four in Texas and three in Missouri.
Casey’s acquisition of Buchanan Energy will include 94 retail stores and 79 dealer locations, as well as multiple parcels of real estate for future new-store construction, which will increase Casey’s footprint by 4% to more than 2,300 stores.
The stores average 3,000 square feet and offer grab-and-go and ready-to-eat food, with full kitchens at newer locations. Casey’s will bring an image refresh and more sophisticated merchandising, it said, leverage procurement scale and add its private-label brands. Store upgrades will include pizza kitchens.
About 90% of the sites feature automated car washes. The acquisition will expand Casey’s presence in key Midwest markets and enable the chain to bring its offerings to a broader group of consumers. The company also sees the acquisition as an opportunity to expand its Casey’s Rewards program.
The transaction will also include a dealer network of stores; Casey’s will manage fuel supply agreements to these stores. This new capability will provide the company future flexibility with respect to mergers and acquisitions as well as a new income stream while leveraging its scale for fuel procurement, it said.
The Bucky’s sites offer the Mobil, BP, Phillips 66 and Shell fuel brands.
“In January of this year, we outlined our business strategy to achieve top-quintile EBITDA [earnings before interest, taxes, depreciation and amortization] growth and deliver on our purpose ‘to make life better for communities and guests every day’,” said Darren Rebelez, president and CEO of Casey’s.
“We’ve been hard at work executing on our strategic vision to reinvent the guest experience; creating efficiencies to improve the shape of our business and to fund future growth; and accelerating our new-store builds and acquisitions. Adding Bucky’s to the Casey’s family is aligned with our strategy.”
Steve Buchanan, founder and president of Buchanan Energy and Bucky’s, highlighted the strategic alignment between the two convenience organizations. “The acquisition by Casey’s is an exciting milestone in our 40-year history, and I am pleased that Bucky’s will join a top convenience retailer for its next chapter.
The addition of Casey’s pizza to our existing high-volume stores will be celebrated by our customers, and our shared Midwestern roots and community values are aligned as we continue to serve our loyal customers.”
Rebelez added, “We anticipate that the acquisition will create compelling value for Casey’s shareholders in the near- and long-term, and it will quickly be accretive to Casey’s EBITDA and earnings per share. This is an exciting time for Casey’s, and we look forward to welcoming the Bucky’s team.”
The company will finance the transaction with a combination of cash on hand, revolver capacity and bank financing. The net investment of $500 million represents a multiple of 10.6 times Bucky’s last 12 months of EBITDA. The company expects to achieve $23 million in annual synergies by the third year.
The companies said they expect the transaction to close by the end of calendar-year 2020, subject to customary closing conditions and regulatory approval.