Czech billionaire Daniel Krytinski has floated a €1.1 billion investment in the heavily indebted French casino retailer group, in a challenge to current controlling shareholder Jean-Charles Naure.
The surprise offer from Casino’s second-largest shareholder comes at a time when Naouri is already in exclusive talks to combine its French retail business with Teract, a small food retailer backed by three prominent French businessmen.
Casino, which is controlled by Naouri through a 51 percent stake, said Monday that it “acknowledged the proposal” from Kretinsky and said it could “lead to a change of control of Casino and to a dilution that could be very significant for existing shareholders.”
Casino said it was also considering asking to appoint a mediator to oversee negotiations with Kretinsky as well as the proposed Teract deal, both of which would require signatures from its bank lenders and bondholders.
If completed, Kretinsky’s bid would provide the casino with an injection of fresh capital. However, it would also increase Kretinsky’s stake in Casino to about 40 percent, 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 seen him lose control of the food retailer he spent decades building.
It remains to be seen whether Kretinsky’s move will throw blows into Casino’s plans to link up with Teract, but two people close to the situation said Naouri was unlikely to accept losing control of Casino. Kretinsky made the unsolicited offer in response to the developments with Teract, and it wasn’t something Naouri sought, they said.
The casino and the four parent companies through which Naouri controls the food store each face a looming roadblock from debt repayment. Casino, which owns the Franprix and Monoprix chains, has to pay €1.2 billion in debt maturities in 2024 and €1.8 billion in 2025. Raleigh, the holding company through which Nuri controls Casino, has entered a court-protected restructuring. in 2019.
In a separate announcement on Monday, Casino said it was continuing exclusive negotiations with Teract seeking to complete a deal that would spin off Casino’s French retail network and merge it with Teract’s organic food and garden center business, while injecting up to 500 million euros in new investment into the operation.
Teract was formed in a Spac deal involving Invivo, a farmers’ cooperative, entrepreneur Moez-Alexandre Zouari, tech billionaire Xavier Niel and investment banker Matthieu Pigasse.
In a boost to this potential partnership, Groupement Les Mousquetaires, which operates Intermarche, France’s third-largest supermarket chain, said it was considering investing in the new group. Discussions are also underway to extend the buying alliance with Casino for two years until 2028.
Clement Jeanelot, an analyst at Bryan Garnier & Co, called Kretinsky’s proposal “very surprising because Kretynsky has always been quite conservative”.
“In all cases, Naouri now seems increasingly poised to lose his grip on the casino more quickly than initially anticipated with renewed risks of bankruptcy on his above holdings,” added Jeannelot.
Under Kretinsky’s proposals, EP Global Commerce — an entity of his investment vehicle VESA Equity Investment, which owns 10 percent of the retail conglomerate — would inject up to €750 million in additional capital into the casino. Vimalac, another casino investor controlled by French entrepreneur Marc Ladret de Lacharriere, will inject up to €150m, while existing casino shareholders will inject up to €200m.
The proposal would also include cash buybacks of unsecured casino debt, converting them into equity. The company’s creditors will also need to sign off on any change in control.
Casino shares, which have fallen more than 60 percent in the past year, were up 2.4 percent in morning trade in Paris.