Ankeny-based Casey’s General Stores has submitted an initial bid for Kroger Co.’s roughly $2 billion convenience-store business, and a deal could help the company stave off pressure from activist investors to sell itself, CNBC reported on Friday.
Casey’s, which is working with an investment bank, is one of several parties seeking to buy the stores and ultimately may not strike a deal, CNBC said, citing sources familiar with the matter.
Cincinnati-based Kroger has three KwikShop convenience stores in Cedar Rapids.
Kroger, the No. 1 U.S. supermarket operator, said in October it was exploring the sale of its nearly 800 convenience stores and CNBC said final offers are due in early February.
Kroger and Casey were not immediately available for comment.
Casey’s shares closed up 2.7 percent, at $127.73, on Friday. Kroger shares closed up 2 percent, at $30.88.
JCP Investment Management, BLR Partners and Joshua Schechter in January asked Casey’s to explore strategic alternatives, including a potential sale, saying the stock was undervalued.
The three had a stake of about one percent in Casey’s, which they valued at about $45 million, as of Jan. 3.
JCP had said Casey’s significantly has underperformed industry leader Alimentation Couche-Tard Inc. since it rejected ATD’s buyout offer in 2010, and also has lagged Murphy USA since Murphy became an independent company in 2013.
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Kroger has hired Goldman Sachs to help sell its 784 KwikShop, Tom Thumb, QuickStop and other stores that generate $4 billion in annual sales. It is seeking to focus on its online businesses amid rising competition.
The convenience store space has seen a number of deals in the past year, with Canada’s Couche-Tard a major acquirer. Last year, the company bought CST Brands for roughly $4.4 billion as well as two smaller gas-and-convenience store chains.
Earlier this month, Seven & i Holdings, the parent of the 7-Eleven network of stores, completed its roughly $3.3 billion acquisition of 1,100 stores from Sunoco LP.