A Czech Billionaire Buys His Groceries at Monoprix
(Bloomberg Opinion) -- Fresh from his tilt at the German retailer Metro AG, Daniel Kretinsky is rolling the dice on France’s Casino Guichard-Perrachon SA.
The Czech billionaire and his business partner Patrik Tkac have acquired 4.6% of the supermarket chain – owner of Paris’s ubiquitous Monoprix stores – through their Vesa Equity Investment vehicle.
Interest in Casino from an outside investor or industry rival is overdue. Despite the problems caused by its complicated ownership structure, the Monoprix and Franprix chains are decent assets. It also has a promising online business, Cdiscount.
Rallye SA, the investment vehicle of Jean-Charles Naouri which owns a controlling stake in Casino, entered a creditor protection program in May. So finding an outsider with enough confidence to invest in the grocery company looks like good news on the surface. Casino’s shares rose as much as 6% on Thursday. It’s hard to be confident, though, about whether this will really loosen Naouri’s grip.
Kretinsky and Naouri, who’s also Casino’s boss, were effusive in their praise of one another in Thursday’s statement on the stake purchase. And there wasn’t a so-called “standstill agreement” in the release, which means Vesa could theoretically lift its holding, possibly by acquiring part of Rallye’s 52% stake. That might even open the way for it to launch a bid for Casino. After all, that was the route taken by Kretinsky with his failed attempt to buy Metro. He would be in pole position too should Casino decide to sell its Latin American assets.
Naouri will propose that Vesa takes a board seat, which ideally would add another powerful voice to make sure the company isn’t just being run to serve the needs of Rallye. Casino has made some reassuring moves in this direction recently, for example by suspending its dividend and using the cash instead to pay down its debt and invest in its operations.
The worry is that Kretinsky simply acts as a backer of Naouri, and Casino’s progress in asserting its independence is undone. The Czech investor says he endorses both the supermarket’s management and its strategy. Naouri would no doubt be reluctant to grant a board seat if the new holder wasn’t supportive of him.
Already there are some troubling signs about Casino’s rehabilitation. Its recent decision to put another 2 billion euros ($2.2 billion) of assets up for sale is puzzling. That, along with a restructuring of its Latin American assets, suggests the grocer might end up returning cash to Rallye to help the investment vehicle pay down its own net debt of 2.9 billion euros.
While Kretinsky could end up as a champion of his fellow minority investors, it would be a mistake to underestimate Naouri and the lengths he will go to keep control. Shareholders will hope that the Czech tycoon proves more independent than his early statements suggest.
To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.
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