Czech billionaire Daniel Křetínský has pitched 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, which Naouri controls via a 51 per cent stake, 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”.

Casino said it was also considering asking for a mediator to be appointed 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.

If finalised, the offer from Křetínský would provide Casino with an injection of new capital. However, it would also increase Křetínský’s stake in Casino to about 40 per cent, making him the largest shareholder, according to people briefed on the proposals. Naouri has previously rejected other potential deals, such as with larger rival Carrefour, that would have led him to lose control over the food retailer he spent decades building.

It remains to be seen if Křetínský’s move will throw a wrench in Casino’s plans to tie up with Teract, but 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.

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, another Casino investor controlled by French businessman Marc Ladreit de Lacharrière, 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.

Casino shares, which are down more than 60 per cent in the past year, gained 2.4 per cent in morning trading on Monday in Paris.

Articles You May Like

BP warns of hit to refining margins
Rudy Giuliani’s bankruptcy case thrown out by US judge
Biden’s determination to stay divides congressional Democrats
Europeans use Nato summit to build contacts with Trump affiliates
Labour considers releasing offenders early to stave off UK prisons crisis