Iowa-based Casey’s General Stores, the fifth largest convenience chain in the nation, expanded its toehold in the Texas market late Friday with news that it is acquiring Fikes Wholesale Inc. for $1.45 billion.
Headquartered in Temple, Fikes owns and operates CEFCO Convenience Stores in 198 locations throughout the South, including 148 stores in Texas. With the acquisition, Casey’s — which already owned 22 stores in North Texas — increases its nationwide footprint to nearly 2,900 stores across 20 states.
The all-cash transaction includes tax benefits valued at $165 million for a net-after purchase price of $980 million. The company plans to finance the transaction through balance sheet cash and bank financing.
The net investment of $980 million represents an approximate multiple of 11 times CEFCO’s pro forma adjusted 2023 EBITDA. In a statement, the company says it expects to achieve $45 million in annual run-rate synergies after augmenting the acquired stores with kitchens.
BMO Capital Markets acted as financial advisor on the deal with Paul, Weiss, Rifkind, Wharton & Garrison counseling on the legal side with antitrust counsel Cleary Gottlieb Steen & Hamilton.
Fikes was advised by BofA on finance with Fort Worth’s Bourland, Wall & Wenzel as legal counsel.
Raymond Smith, president of Fikes, said he appreciates the opportunity presented by Casey’s planned expansion of services.
“I am happy that the CEFCO stores will join a top convenience retailer that will reinvest in the stores and eventually bring Casey’s pizza to many of our customers as well as provide professional opportunities for our employees,” he said.
Darren Rebelez, president and CEO of Casey’s, indicated the company’s expansion would continue in Texas and elsewhere.
“During our Investor Day presentation in June of 2023, we outlined our business strategy to achieve top-quintile EBITDA growth. One of the core pillars of the plan is to grow the number of units,” said Rebelez.
“This acquisition will allow Casey’s to accelerate our unit growth plan with high-quality assets that, along with our recent 22 store acquisition in northern Texas, will provide an expanded presence in Texas and allow us to continue to expand in the state and region.”
As of July 1, according to the data company ScrapeHero, Casey’s currently has 2,671 locations across 17 states, primarily in the Midwest. The acquisition of CEFCO’s 198 locations would bring that number to 2,869.
The deal is expected to close, pending regulatory approval, in the fourth quarter.