Alimentation Couche-Tard Inc. (TSX:ATD.B) said minority shareholders of Statoil Fuel & Retail have been slow to tender their stock to its friendly takeover offer.
So far, about 67 per cent of the shares have been tendered, including Statoil ASA, the oil company that owns 54 per cent of the Scandinavian convenience store operator.
But Couche-Tard requires acceptance by 90 per cent of Statoil Fuel's shareholders.
"We are disappointed with the preliminary results considering that we waived the offer condition relating to approvals and consents from governmental authorities," said Couche-Tard CEO Alain Bouchard.
Three independent evaluations have confirmed that Couche-Tard's US$2.68-billion offer is within the range that reflects the value of the company.
Since the offer was made in mid-April, the Oslo Stock Market has fallen by 8.1 per cent and the Euro Stoxx 50 index has contracted by 9.4 per cent. As well, no competing bid has surfaced.
Couche-Tard said that due to disappointing response from minority shareholders, the deadline for acceptance has been extended to May 29.
"We remain firmly convinced that our offer provides full and fair value for Statoil Fuel & Retail and believe that its shareholders will ultimately recognize it by tendering their shares prior to the May 29 deadline," Bouchard added.
Martin Landry of GMP Securities believes shareholder support will grow even though momentum has been relatively slower than other similar transactions in Norway.
"In our view, Couche-Tard's offer is compelling and should gather greater shareholder support in coming weeks given the lack of competing offers, the support from SFR's parent company, the turbulence in the European stock markets and the 53 per cent premium over the closing price," Landry wrote in a research note.
While the transaction could add a level of risk to an investment in Couche-Tard, Landry said the quality of the asset targeted and the significant accretion potential should outweigh added risks.
"In addition, Couche-Tard management has had an excellent track record of creating shareholder value through acquisitions, which should reassure investors."
Landry has a target price for Couche-Tard of C$51.
On the Toronto Stock Exchange, the Quebec-based company's shares closed at C$39.04, down $2.37 or 5.7 per cent in Tuesday trading.
Some European analysts have renewed suggestions that Couche-Tard may have to increase its offer to reach the required threshold.
Among them is Martin Stenshall of Danske Markets. He said Couche-Tard's offer, which values the company at US$36 billion including debt, is a "bargain" considering Statoil's growth potential.
He wrote in a research note that more than 10 per cent of SFR shareholders are waiting for Couche-Tard to boost its offer price.
Pareto Securities also predicted that Couche-Tard needed to enhance its offer to reach the 90 per cent threshold.
Lars-Daniel Westby of SpareBank 1 Markets said in an email that Norwegian institutional investors and a key customer of U.S. bank JP Morgan wants the offer increased to 53 Norwegian krone per share, an increase of 1.80 NOK.
Couche-Tard chief financial officer Raymond Pare couldn't be reached for comment. But he has previously poured cold water on such suggestions.
Statoil Fuel & Retail operates about 2,300 outlets Scandinavia and Eastern Europe.
Couche-Tard owns the Couche-Tard and Mac's stores in Canada and the Circle K stores in the United States.
— With files from Sylvain Larocque