The Canadian-based suitor of Casey’s General Stores Inc. let it be known that its intentions were serious last week when it sweetened its offer for the convenience store chain to $38.50 a share, a $1.75 increase from its previous offer and $2.50 higher than its original bid.

Alimentation Couche-Tard Inc. has made no secret of its desire to expand its near domination of the U.S. convenience store market by adding Casey’s 1,500 stores to its network of 5,878 stores, many acquired through acquisitions.

However, Casey’s board has downplayed previous offers as being an attempt to buy its company on the cheap.

Casey’s even accused Couche-Tard of violating federal securities laws by attempting to stop a spike in Casey’s stock price by dumping nearly 2 million shares on the market within hours of announcing its original bid to buy the homegrown Iowa company for $36 per share on April 8.

Travis Sapp, an associate professor of finance at Iowa State University, noted that the new offer, representing a 22 percent increase over the price of Casey’s stock on April 8, means Couche-Tard is in the game for real.

In addition to announcing Sept. 1 that it had upped the ante in its bid to acquire all of Casey’s stock, Couche-Tard also said it had secured a $1.5 billion lending facility from a team of Canadian banks to complete the deal, which has a current value of about $2 billion.

If Couche-Tard succeeds, it also will acquire $528 million in Casey’s debt, most of which was created to repurchase 26 percent of its own stock at a price of $38 a share.

Stockholders are getting what they paid for now that Couche-Tard has increased its offer, Sapp said.

“If most of the expected gains are being surrendered to Casey’s shareholders in the takeover bid, there is little room for error in Couche-Tard’s plans for synergy gains after a merger is complete,” Sapp said.

Shareholders should be the beneficiaries of any takeover attempt, Sapp said.

In addition to a boost in share price, shareholders have gained increased value in the company from the tax benefits Casey’s will derive by taking on more debt to finance the stock buyback, he said.

The fact that Casey’s recently “levered up” diminishes the ability of a merged company to seek tax gains by taking on even more debt. Casey’s took on an additional $500 million to buy back its stock.

“How they (Couche-Tard) pay for the acquisition requires them to balance the benefits of debt (the interest tax deduction) with the costs (increased risk of financial distress),” Sapp said.

Casey’s said last week that it will acquire about 13.2 million shares, or 26 percent, of its stock as a result of the repurchase.

In the end, the takeover target is the winner, Sapp said.