Will Couche-Tard and The Pantry merge?

By Tracey Arial

Laval-based convenience store powerhouse Couche-Tard’s second largest expansion deal will be approved or rejected by shareholders in North Carolina this morning.

The Quebec-based giant announced its intention to purchase a North Carolina-based company called The Pantry for $1.7 billion dollars in cash last December. The plan was to begin merging the two companies right away.

Stockholders will meet in a Cary, North Carolina hotel at 10 a.m. this morning (March 10) to vote to accept or refuse the merger. The date comes early enough to enable Couche-Tard to include the merger in its third quarter 2015 results, which are due March 17.

The expansion is being held up because three different law firms are claiming that Couche-Tard’s offer is too low to provide fair value to stockholders.

New-York-based Levi & Korsinsky filed a class action lawsuit against The Pantry on behalf of all investors’ behalf last month. According to Joseph E. Levi, “the claims concern whether the Board of The Pantry breached their fiduciary duties to stockholders by failing to adequately shop the Company before agreeing to enter into this transaction, and whether Couche-Tard Inc. is underpaying for The Pantry shares.”

A second class-action suit was also launched in Delaware Chancery Court against Couche-Tard, The Pantry Inc. and its CEO Dennis Hatchell, Chairman of the Board Thomas Dickson and board members Kathleen Guion, Todd Diener, Wilfred Finnegan, Mark Miles, Joshua Schechter, James Pappas, Ross Pillari and Terry McElroy for essentially the same reason. Dennis Krystek is lead plaintiff in that action.

Questions about the deal’s benefit to shareholders were raised as soon as it was announced in December by Charles C. Foti, the former Attorney General of Louisiana, and a partner in the law firm Kahn, Swick and Foti. No official lawsuit has yet been launched by that firm.

The Pantry board set up a vote to ask its stockholders to approve the merger on Friday, February 6, three days after Levi launched the class action lawsuit. Proxy statements were mailed to a list of current shareholders the same day.

According to the statement, management remains firmly in favour of the Couche-Tard deal. It says “the Pantry and its directors, executive officers, and certain other members of management and employees may be deemed to be participants in the solicitation of proxies in favor of the proposed transaction from the stockholders of The Pantry.”

If the transaction goes through later this year, it will be the second largest purchase in Couche-Tard’s history. It will add 15,000 employees and more than 1,500 Kangaroo Express stores into Couche-Tard’s world-wide network of 13,142 stores.

“The Pantry is an excellent company and is well-positioned in the Southeastern and Gulf Coast regions of the United States, two of the fastest growing areas of the U.S.,” said president and CEO Brian P. Hannasch, when he announced the deal in December. “We look forward to combining the capabilities of The Pantry team with Couche-Tard to enhance value for our shareholders.”

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