Casey’s to Buy 40 Pilot Convenience Stores for $220M

Casey’s General Stores, Inc. (CASY) has entered into an all-cash deal worth $220 million to acquire 40 Pilot convenience stores from Pilot Corporation. The company engages in the management and operation of convenience stores and gasoline stations.

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With this buyout, Casey’s will expand its presence in Tennessee and Kentucky with well-established locations primarily in the attractive Knoxville, Tennessee, market. (See Casey’s stock charts on TipRanks)

The transaction will be funded with cash in hand and bank financing. Also, it is subject to customary closing conditions and regulatory approvals, including Hart-Scott-Rodino clearance.

The company says that Pilot’s convenience stores are owned and operated independently from travel center and energy businesses and are not included in the Berkshire Hathaway transaction.

The President and CEO of Casey’s, Darren Rebelez, said, “These stores have a track record of strong performance, and are high quality assets that will be a great fit for Casey’s fresh food program, especially our handmade pizza.”

On September 15, Berenberg Bank analyst Brian McNamara maintained a Buy rating on Casey’s with a price target of $259 (35.7% upside potential from current levels).

Mcnamara said, “One of several strategic initiatives implemented by CEO Mr. Darren Rebelez has been to increase Casey’s penetration of higher-margin private brands, which is quite low compared to most retail concepts.”

“Six months after a store reset, Casey’s private brands exited August representing 4.4% of grocery sales – more than double the penetration management outlined at its Investor Day just 20 months ago,” the analyst added.

The stock has a Strong Buy consensus rating based on 5 Buys and 1 Hold. The average Casey’s price target of $244.50 implies 28.1% upside potential from current levels.

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Casey’s with 13.3% of investors on TipRanks increasing their exposure to CASY stock over the past 30 days.