Czech billionaire Daniel Křetínský has pitched to lead a €1.1bn investment in heavily indebted French supermarket group Casino, in a challenge to the current controlling shareholder Jean-Charles Naouri.
The surprise offer from Casino’s second-biggest shareholder comes as Naouri is already in exclusive deal talks to combine its French retail business with Teract, a smaller food retailer backed by a trio of prominent French businessmen.
Casino said on Monday that it “acknowledged the proposal” from Křetínský and that it could “lead to a change of control of Casino and to a dilution which might be very significant for existing shareholders”.
Kretinsky has also teamed up with a longtime Naouri ally, the wealthy French investor Marc Ladreit de Lacharrière, whose Fimalac group is now the third-biggest shareholder in Casino. If finalised, the offer from Křetínský and de Lacharrière would provide Casino with an injection of new capital and likely lead to a debt restructuring process.
Given the dilution, the duo would then own a majority of the Casino shares and cause Naouri to lose control of the company he founded decades ago, ending up with a minority stake, down from the 51 per cent he now holds.
Naouri has previously rejected other potential deals, such as with larger rival Carrefour, that would have led him to lose control, but the state of Casino’s finances and its operations are more fragile now.
Křetínský’s move could complicate Casino’s plans to tie up with Teract, and pits a cast of powerful tycoons against each other in a battle for the future of the country’s seventh-biggest food retailer as it teeters on edge of insolvency and rapidly loses market share.
Two people close to the situation said Naouri was unlikely to accept losing control over Casino. Křetínský made the unsolicited offer in reaction to the developments with Teract, and it was not something that Naouri sought out, they said. For decades, Naouri build up Casino and embarked on an overseas expansion fuelled by debt, but in recent years has been forced to do asset sales as he seeks to pay down debt.
Casino said it was also considering asking for a court-appointed official to to oversee the negotiations with Křetínský as well as the proposed Teract deal, both of which would require the sign off of its bank lenders and bondholders. This would be done in what is known as a procédure de conciliation in French law, which is a step short of a bankrupcty proceeding.
Both Casino and the four parent companies through which Naouri controls the food retailer face a looming wall of debt repayments. Casino, which owns the Franprix and Monoprix chains, must pay back €1.2bn in debt maturities in 2024 and €1.8bn in 2025. Rallye, the holding company through which Naouri controls Casino, entered a court-protected restructuring in 2019.
In a separate announcement on Monday, Casino said it was continuing exclusive negotiations with Teract seeking to finalise a deal that would hive off Casino’s French retail network and combine it with Teract’s organic food and garden centre business, while injecting up to €500mn in new investment into the operation.
Teract was formed in a special purpose acquisition company deal involving farmers’ co-operative InVivo and entrepreneur Moez-Alexandre Zouari, tech billionaire Xavier Niel and investment banker Matthieu Pigasse.
In a boost for that potential tie-up, Groupement Les Mousquetaires, which operates Intermarché, the third-biggest supermarket chain in France, said it was considering investing in the new group. It is also in discussions to extend its purchasing alliance with Casino by two years to 2028.
Clément Genelot, analyst at Bryan Garnier & Co, called Křetínský’s proposal “very surprising as Mr Křetínský has always been quite discreet”.
“In all cases, Mr Naouri now looks increasingly set to lose his grip on Casino faster than initially anticipated with renewed bankruptcy risks on his holdings above,” Genelot added.
Under Křetínský’s proposals, EP Global Commerce — an entity affiliated with his investment vehicle VESA Equity Investment, which owns 10 per cent of the retail group — would inject up to €750mn in additional capital in Casino. Fimalac would inject up to €150mn, while other existing Casino shareholders would put in up to €200mn.
The proposal would also include cash repurchases of Casino’s unsecured debt, converting it into equity. The company’s creditors would also need to sign off on any change of control.
Shares in Casino closed down 1.62 per cent at €6.37.
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