Casey's Buying 58 Gas ‘N Shop Stores

ANKENY, IA-Casey’s General Stores says it has signed a letter of intent to buy 58 stores from Gas ‘N Shop of Lincoln, NE. The deal includes 54 stores in Nebraska, three in Kansas and one in Iowa.

All of the locations acquired will be converted to Casey’s General Stores. In 2004, the 58 stores generated about $108 million in gross sales revenue.

“The acquisition of the Gas ‘N Shop locations is an excellent fit to our existing store base and will nearly double our presence in Nebraska,” says Ron Lamb, chairman and chief executive officer. All of Casey’s approximately 1,400 convenience store locations are in nine states in the Upper Midwest.

Casey’s goal is to acquire at least 43 stores and build 15 new stores each year–adding about 3.5% to total store growth. As of Jan. 31, Casey’s had a total of 1,368 General Stores in operation, of which 1,343 were owned by the company and 25 operated by franchisees. In the nine months through Jan. 31, the company had bought 22 stores, had written deals for 12 more and agreements for eight stores. Through April of this year, the company has opened about 13 stores.

The acquisition is expected to close during the company’s second fiscal quarter and will be funded by a combination of existing cash and operating cash flow. The deal, for which the company did not disclose the terms, would add to earnings in the first year of operation, according to Casey’s. A typical store is generally not profitable for its first year of operation due to start-up costs and will usually attain representative levels of sales and profits during its first three to five years of operation. The acquisition should provide more operating efficiencies by adding Casey’s prepared food operations to the Gas ‘N Shop stores.

Casey’s stores make most of their money from the retail sale of gasoline and the grocery and general merchandise items. About 62% of all Casey’s General Stores are located in areas with populations of fewer than 5,000, while approximately 11% of all stores are located in communities with populations exceeding 20,000.