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Shareholders challenge Casey’s

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A pension fund has asked a federal judge to block the poison pill challenge to a takeover that has been adopted by Casey’s General Stores Inc.’s board of directors.

The Kentucky State District Council of Carpenters Pension Funds Trust filed a shareholders class-action lawsuit last week in U.S. District Court in Des Moines. This is the third lawsuit that attempts to force the Casey’s board to negotiate a purchase price with Alimentation Couche-Tard Inc., which announced in April that it wanted to buy the Ankeny-based convenience store chain.

Couche-Tard, based in Quebec, Canada, and the largest operator of convenience stores in North America, has offered $36.75 a share to buy Casey’s. In addition, the Couche-Tard will attempt to elect a slate of directors to Casey’s board during its annual meeting in September. Couche-Tard has said it believes those directors will favor its offer.

Casey’s has adopted two approaches to block the bid. It established a poison pill that allows shareholders to buy Casey’s stock at a fraction of its price, but blocks any purchaser of more than 15 percent of Casey’s stock from doing so. The poison pill also allows Casey’s shareholders to purchase an acquiring company’s stock at a two-for-one price.

In addition, Casey’s Iowa-based board of directors also extended the contracts of its top officers and added financial sweeteners to their compensation packages in the event of a takeover.

The Carpenters lawsuit asks a judge to force Casey’s board to “refrain from placing any unreasonable or preclusive hurdles to a potential acquisition of the company,” among other things.

In addition, the lawsuit alleges that the board has misstated Couche-Tard’s offer as stated as a multiple of Casey’s earnings before interest, tax, depreciation and amortization.

Casey’s has filed a lawsuit accusing Couche-Tard of violating federal securities law when it purchased nearly two million shares of Casey’s stock in the months leading up to its offer, then sold the stock at a net profit of about $10 million the same day it announced plans to buy the company.

Couche-Tard has filed counterclaims to that lawsuit, claiming that Casey’s is hiding behind Iowa business statutes that violate federal law in its attempt to block the takeover.