Kretinsky eyes majority stake in casino through €1.1bn capital increase

Posted: Apr 24, 2023 12:00 Posted by Matthew Calleja
Category: Casino, Europe, M&A Action,
Posted: Apr 24, 2023 12:00 Category: Casino, Europe, M&A Action, Posted by Matthew Calleja

Daniel Kretinsky, a Czech billionaire, has offered to acquire the debt-ridden French supermarket chain, Casino (CASP.PA), through a €1.1 billion capital increase. This move challenges the proposed merger between Casino and Teract (TRACT.PA), a smaller retailer.

Kretinsky’s €1.1 billion capital increase proposal

If the deal goes through, Kretinsky will gain control of several renowned retail brands such as Franprix and Monoprix in France, where he has increased his presence in recent years. The move also presents an exit strategy for Jean-Charles Naouri, Casino’s owner, who is 74 years old.

In addition, Kretinsky’s move may attract the attention of Fnac Darty (FNAC.PA), as its primary investor is Kretinsky, and Casino’s e-commerce retail arm, CDiscount, is believed to be a target for Fnac Darty.

Over the past decade, Kretinsky has been expanding his business interests into retail, media, and other areas. His portfolio includes a stake in Le Monde, a French newspaper, France’s largest private TV network, TF1, and he is in talks with Vivendi (VIV.PA), a media group, to acquire publishing group Editis.

Daniel Kretinsky
Daniel Kretinsky holds the position of CEO and a 94% stake in Energetický a průmyslový holding (EPH), which is the biggest energy conglomerate in Central Europe.

Following Kretinsky’s offer, Casino’s shares rose by 3% on Monday, after experiencing a slump to record lows when Moody’s, a rating agency, downgraded its long-term debt rating to a further into junk territory. As of now, Casino’s market value is around €700 million, compared to €11 billion in 2014.

With a debt of about €3 billion maturing in 2024 and 2025, Casino has been divesting assets to meet its debt repayment obligations, including a stake in its Brazilian business, Assai.

Kretinsky’s offer comes as Casino is holding exclusive talks to merge its French retail business with Teract, a company that is backed by Xavier Niel, another billionaire.

Groupement Les Mousquetaires joins merger talks

French supermarket chain Casino has announced that it is in talks with several entities, including Groupement Les Mousquetaires, the parent company of Intermarche, regarding a potential merger.

In a separate development, EP Global Commerce, a Czech firm owned by billionaire Daniel Kretinsky, has made an offer to subscribe to a capital increase worth €1.1 billion. The proposed deal would see Kretinsky’s entity subscribe to a reserved capital increase of up to €750 million, while Fimalac, the third-largest shareholder of Casino, would buy into a share sale of up to €150 million. Existing shareholders would take the remaining €200 million.

According to two sources close to the matter, the capital increase would result in Kretinsky owning more than a 40% stake in the supermarket chain, making him the largest shareholder. The proposal would involve the cash repurchase of Casino’s debt, which would be converted into equity, leading to a potential change of control and dilution of existing shareholders.

The deal would also require an agreement with Casino’s creditors, who hold around €3.6 billion in unsecured debt.

Under the terms of the deal, the debt would either be converted into equity or reimbursed at a discount, which would lead to a significant improvement in Casino’s balance sheet. The supermarket chain said it was considering asking for a court-appointed conciliator to oversee discussions with bank creditors and bondholders over the two potential deals.

Meanwhile, it plans to evaluate EP Global Commerce’s proposal over the coming weeks while continuing discussions with Teract and Groupement Les Mousquetaires.

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