Casey’s General Stores Inc. will buy up to $500 million of its stock in an effort to block a takeover by North America’s largest convenience store operator.

Ankeny-based Casey’s said today it plans to offer between $38 and $40 a share in a Dutch auction. The move will be financed by a combination of debt financing and available cash.

At the same time, Casey’s board of directors said it has rejected a recently updated offer of $36.75 a share from Alimentation Couche-Tard Inc., the Quebec, Canada, company that wants to acquire all of Casey’s stock.

Couche-Tard announced in April that it was offering $36 a share for all of Casey’s outstanding stock. The offer has been repeatedly rejected by Casey’s board, which established a poison-pill defense to the takeover offer that involved allowing existing stockholders to buy shares at a discount rate in the event that a suitor acquired at least 15 percent of the company’s stock.

Both sides have sought to have a federal judge intervene. In addition, lawsuits have been filed in federal court and Polk County District Court by shareholders who want Casey’s board to negotiate a purchase price with Couche-Tard.

However, Casey’s believes it has put Couche-Tard “in a box” by offering to buy its own stock at a price the Canadian company has said could be beyond its reach, a source close to Casey’s said. The company has maintained throughout the takeover attempt that Couche-Tard is attempting to expand its holdings on the cheap.

Some analysts have maintained that the Couche-Tard offer undervalued Casey’s.

Casey’s President and CEO Robert Myers said in a statement that the recapitalization plan “will generate significant value and enhance returns for Casey’s shareholders while allowing us to pursue our strategic growth initiatives.”

Travis Sapp, an associate professor of finance at Iowa State University, said in a July 26 Business Record story that Casey’s would enhance its value to shareholders if it took on more debt. He also questioned the company’s takeover defense. Click hereto read the story.

“My reaction is that Casey’s got it right,” Sapp said today in an e-mail. “I thought all along that this was their best defense against takeover, as they were significantly under-leveraged. … By recapitalizing (replacing equity with debt) Casey’s has removed an attractive source of value for a potential acquirer and has given that source of value directly to its own shareholders, as it should.”

Reuters reported that at least one analyst believes the Casey’s plan could stop the Couche-Tard takeover.

“Given these new developments, the likelihood of a transaction seems more remote,” said Martin Landry, a research analyst with Desjardins Securities.

“We view this new strategy by Casey’s management as a significant roadblock for Couche-Tard in its plan to acquire Casey’s shares,” he said.

Casey’s said the buyback will begin Thursday and expire Aug. 25 at 11 p.m. Iowa time.

Under the Dutch auction, shareholders would offer their stock at between $38 and $40 a share. The company would then determine the lowest price within that range and buy the stock at that price. Casey’s could acquire about 25 percent of the nearly 51 million shares of stock that are outstanding.

The Couche-Tard offer initially was set to expire July 9, but the company has extended the deadline to Aug. 6. When announcing the new deadline, Couche-Tard said it had acquired slightly more than 19 percent of Casey’s stock at the $36 price.