Casey's to expand Texas footprint with $1.15 billion purchase of CEFCO owner

By Juveria Tabassum

(Reuters) -Casey's General Stores said on Friday it would acquire Fikes Wholesale, the owner of CEFCO convenience stores, in an all-cash transaction for $1.15 billion in a bid to strengthen its presence in Texas.

The company's shares, which have risen about 35% so far this year as of last close, gained as much as 6.3% to a record high of $396.26 in early trade.

The acquisition of Fikes will enable Casey's to add 148 stores in Texas — a market it entered in November after buying W. Douglass Distributing and its 22 Lone Star Food Stores.

Casey's, which is the third-largest convenience store chain in the United States, would increase its footprint in the country to nearly 2,900 stores with the acquisition of the CEFCO owner.

Fikes has a total of 198 CEFCO stores, located in Texas, Alabama, Florida and Mississippi, as well as a dealer network.

The "solid add-on transaction" will increase Casey's network by about 7% in the four states, said RBC Capital Markets analyst Irene Nattel, adding that the deal should not face substantial regulatory hurdles since the company has limited presence in the states.

Casey's plans to finance the transaction through balance sheet cash and bank financing, and expects the deal to close in the fourth quarter.

The Iowa-based company, also known for its stores' pizzas, expects to add about $45 million in annual revenue after completing kitchen installations in the newly acquired stores.

(Reporting by Juveria Tabassum; Editing by Krishna Chandra Eluri and Maju Samuel)