Casino’s Boss Gets Help From Duo That Failed to Buy Metro

(Bloomberg) -- Casino Guichard-Perrachon SA’s embattled Chief Executive Officer Jean-Charles Naouri got help in his efforts to keep control of the French retailer from a pair of eastern European investors who bought a stake and endorsed his strategy.

Czech billionaire Daniel Kretinsky and partner Patrik Tkac acquired 4.6% of Casino, turning their attention to the troubled retailer after their effort to take over German wholesaler Metro AG was rebuffed. Casino shares surged as much as 6% in Paris trading.

Kretinsky and Tkac, who bought the stake via investment vehicle Vesa Equity, see opportunity in Casino’s business model. The two said in a statement Thursday that they believe the company to be “the distribution group best positioned on the French market and one of the European leaders best equipped to address the sector’s profound transformations.” They will get a seat on the board.

Casino’s Troubles

The move comes as Casino seeks to shore up its finances and reduce debt after a long fight with short sellers. Parent company Rallye SA is operating under French “safeguard” procedures that provide protection from creditors. Rallye is part of a string of indebted holding companies that allow Naouri to control the retailer. Its shares soared as much as 13% after the announcement.

The news “will obviously continue to drive speculation on Casino that a third-party player may be willing to purchase the group,” said Clement Genelot, an analyst at Bryan Garnier & Co. The impression is reinforced by the billionaire buyer’s recent efforts to acquire Metro, he said.

Casino is caught between an ownership structure that’s forced it to pay high dividends to keep its parent afloat and a competitive French landscape in which it faces hard discounters such as Lidl and larger rivals such as Carrefour SA and E. Leclerc. In July, it canceled next year’s dividend as it accelerates its debt-reduction plans.

“Beyond the new shareholder, there is no improvement in the financial sustainability of Casino and its parent group,” Bruno Monteyne, an analyst at Sanford C. Bernstein, wrote in a note to clients. “This press release is all about confidence building.”

The new investors said they support Casino’s “omnichannel” strategy, under which it operates everything from suburban big-box outlets to downtown convenience stores while boosting its digital efforts. Its food-and-clothing stores under the Monoprix brand, which have a partnership with Amazon.com Inc., have outperformed the larger hypermarkets by attracting upmarket shoppers. Casino also has a deal with U.K. online grocer Ocado Group Plc.

Financing Crunch

Casino said in August that it plans a new round of asset disposals that would raise an additional 2 billion euros ($2.2 billion), after a first phase of 2.5 billion euros worth of divestments. Casino has lost access to some short-term financing after S&P Global Ratings downgraded the company to five levels below investment grade in May.

Casino’s and Rallye’s bonds rose on the news. Casino bonds due January 2023 gained 4.5 cents on the euro to 96 cents, the highest level in almost four months, according to data compiled by Bloomberg.

Kretinsky, who has a net worth of at least $3 billion, according to the Bloomberg Billionaires Index, has built a portfolio that includes energy and media assets alongside the Sparta Prague soccer team. Last year, he acquired a stake in French daily Le Monde.

In June, he and Slovakian partner Tkac launched a 5.8 billion-euro bid to buy out Metro, but last month the offer fell short of the minimum shareholder acceptance threshold.

After the takeover attempt for Metro failed, Kretinsky said he would not purchase more shares in the German wholesaler for the time being while he awaits progress on Metro’s efforts to sell German big-box retail chain Real and a stake in its operations in China to focus on cash-and-carry outlets.

--With assistance from Albertina Torsoli, Luca Casiraghi and Richard Weiss.

To contact the reporter on this story: Eric Pfanner in London at epfanner1@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Marthe Fourcade

©2019 Bloomberg L.P.