Casey’s Considers $2B Kroger Convenience Store Acquisition

Under pressure from an activist investor, JCP Investment Management, convenience store chain Casey’s General Stores has reportedly placed an initial bid to acquire grocer Kroger’s $2 billion C-store business. That line operates under brand names like Kwik Shop, Turkey Hill and Tom Thumb, CNBC reported Friday (Jan. 26).

JCP recently asked the Iowa-based convenience store operator to explore strategic alternatives such as a potential sale. If Casey’s were to purchase Kroger’s convenience stores, however, it could fend off the investor’s pressure to sell, according to sources with knowledge of the company.

JCP, BLR Partners and Joshua Schechter owned a combined $45 million of Casey’s common stock as of the beginning of January. In October, Kroger said it was looking into strategic alternatives for its nearly 800 convenience stores and was working with Goldman Sachs on a potential sale. Casey’s, which is working with an investment bank, is one of many potential suitors for Kroger’s C-store business and may not be successful in its bid. Final offers are due in early February.

The news comes as convenience store chain 7-Eleven’s holding company, Seven & I, acquired 1,108 Sunoco-operated gas stations and retail convenience stores in 18 states in 2017. The sale included the Stripes brand, a food-focused convenience store chain popular in Texas, Louisiana, New Mexico and Oklahoma. Worth $3.3 billion dollars, the deal was the result of a 7-Eleven company goal to operate 10,000 locations in the U.S. by 2020. As part of the acquisition, 7-Eleven agreed to purchase gasoline from Sunoco for the sites for 15 years.

In a similar move, Canadian convenience store chain Couche-Tard announced in 2016 that it had reached a $3.8 billion agreement to acquire retailer CST Brands and take over its more than 2,000 stores in the U.S. and Canada. Couche-Tard is the leader in the Canadian convenience store sector and is quickly becoming one of the largest independent C-store operators in the U.S., as well.