Acquisitions

3 Months Ended

Jul. 31, 2021

Many of our acquisitions meet the criteria to be considered business combinations. The Company accounts for business combinations using the acquisition method of accounting. Under this method of accounting, acquired assets and assumed liabilities are included within the acquirer's accounts as of the date of acquisition, with any excess of purchase price over the fair value of the net assets acquired recognized as goodwill. Acquisition-related transaction costs are recognized as period costs as incurred. We accounted for the Buchanan Energy and Circle K acquisitions as business combinations.

Buchanan Energy

On May 13, 2021, the Company closed on the acquisition of 100% of the equity interest in Buchanan Energy (and certain of its related subsidiaries and affiliated entities), owner of Bucky’s Convenience Stores. The transaction included 92 retail locations (consisting of 24 stores in Nebraska, 56 in Illinois, five in Iowa, three in Missouri, and four in Texas), a dealer network of 81 stores where Casey’s will manage fuel wholesale supply agreements to these stores, as well as several parcels of real estate which may be used for new store construction. Three of the retail locations were divested shortly after closing as part of a consent order with the Federal Trade Commission. As a result of this acquisition, we increased our total store count to over 2,300 stores and have added a fuel wholesale business. The Company expects to achieve certain synergies over time, in part, through the reduction of duplicate processes, improvements in purchasing power, installing our kitchens, and expanding merchandise offerings.

The aggregate purchase price for the acquisition totaled $569,457, which is net of a provisional working capital adjustment of $7,785. Upon closing, $577,242 was paid in cash using available cash on hand and proceeds from the

Term Loan Facility and a draw on the Revolving Facility, as discussed above in Note 4. The draw on the Revolving Facility has been repaid at July 31, 2021.

The table below summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. We are utilizing a third-party valuation specialist to assist in valuing the contractual customer relationships, leases, and property and equipment acquired. The valuation is still in process and, as a result, amounts related to goodwill, leases, contractual customer relationships, property and equipment, and deferred income taxes are provisional measurements and are subject to change. Additionally, the accounting related to contingent liabilities and the working capital adjustment is considered incomplete and is subject to change.


Assets acquired:
Cash and cash equivalents	$	5,517
Receivables	3,023
Inventories	19,414
Prepaid expenses	400
Property and equipment	298,341
Contractual customer relationships	31,100
Deferred income taxes	1,343
Finance lease right-of-use assets	10,689
Operating lease right-of-use assets	11,816
Other assets	52
Goodwill	247,671
Total assets	629,366
Liabilities assumed:
Accounts payable	19,762
Accrued expenses	8,395
Finance lease liabilities	12,369
Operating lease liabilities	15,666
Other long-term liabilities	3,717
Total liabilities	59,909
Net assets acquired and total purchase price	$	569,457

Acquired operating lease right-of-use assets are included within other assets, net of amortization and acquired operating lease liabilities are included within accrued expenses and other long-term liabilities in the condensed consolidated balance sheets as of July 31, 2021. The value assigned to leases is considered provisional.

The $31,100 of contractual customer relationships will be amortized over a useful life of 15 years and are included within other assets, net of amortization in the condensed consolidated balance sheets as of July 31, 2021. These assets were valued using the multi-period excess earnings method. As noted above, the valuation for such intangibles is currently in process. As a result, the values assigned to contractual customer relationships is considered provisional.

The goodwill acquired was assigned to the retail reporting unit in the amount of $239,223 and the fuel wholesale reporting unit in the amount of $8,448. The goodwill recognized is primarily attributable to the location of the seller’s store in relation to our footprint and expected synergies due to expanded inside store offerings and improved purchasing power. Almost all of the goodwill acquired as the result of this transaction will be deductible for income tax purposes over 15 years. The value assigned to goodwill is considered provisional.

The Company incurred total acquisition-related transaction costs of approximately $8.6 million, which includes approximately $6.7 million incurred during the quarter ended July 31, 2021. The expenses incurred during the quarter ended July 31, 2021 are included in the condensed consolidated statements of income within operating expenses.

The Company recognized approximately $223,644 of revenue related to Buchanan Energy in the condensed consolidated statements of income for the three months ended July 31, 2021. The amount of net income related to Buchanan Energy was not material for the three months ended July 31, 2021.

Circle K

Throughout June 2021, the Company closed on the acquisition of 48 stores located in Oklahoma from Circle K pursuant to the terms and conditions of an applicable asset purchase agreement. The aggregate purchase price for the acquisition totaled $41,416, which was paid in cash upon closing using available cash on hand.

The table below summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. We are utilizing a third-party valuation specialist to assist in valuing the leases acquired. The valuation is still in process and, as a result, amounts related to goodwill and leases are provisional measurements and are subject to change.


Assets acquired:
Inventories	$	5,299
Property and equipment	6,150
Finance lease right-of-use assets	37,086
Operating lease right-of-use assets	23,920
Goodwill	31,672
Total assets	104,127
Liabilities assumed:
Accrued expenses	545
Finance lease liabilities	46,576
Operating lease liabilities	15,590
Total liabilities	62,711
Net assets acquired and total consideration paid	$	41,416

The goodwill recognized from this transaction is primarily attributable to the location of the seller's store in relation to our footprint and expected synergies due, in part, to expanded inside store and fuel offerings. All of the goodwill acquired as a result of this transaction will be deductible for income tax purposes over 15 years.

Pro Forma Information

The following unaudited pro forma information presents a summary of our condensed consolidated statements of income as if the Buchanan Energy and Circle K transactions referenced above occurred on May 1, 2020 (amounts in thousands, except per share data):


	Three months ended July 31,
	2021	2020
Total revenue	3,239,699	2,332,567
Net income	127,439	120,574
Net income per common share
Basic	3.43	3.26
Diluted	3.41	3.24