Carrefour eyes Casino, but Kretinsky is possible killjoy

Rumours about a takeover bid by Carrefour for its rival Casino are re-emerging, a deal that would lead to a strong number one in both France and Brazil. Daniel Kretinsky however may still put a stop to it... 



For several weeks now, Carrefour has been preparing a hostile takeover bid on Casino, anonymous sources reported to French website BFM Business. This bid would amount to between 4 and 4.2 billion euros, some 25 % above the current market value. With this bonus, Carrefour probably wants to seduce the banks who hold shares in Casino, because there is no doubt that Casino's CEO Jean-Charles Naouri will reject the proposal despite being in a difficult financial situation. Several companies of the group are protected against creditors and parent company Rallye is suffering from a debt of up to 2.9 billion euros.


Carrefour however hesitates to launch the attack, because of Czech investor Daniel Kretinsky. He previously tried to acquire control of Metro, and took a 4.63% stake in Casino last week, together with his business partner Patrik Tkac - to the delight of Naouri, who sees the participation as a proof of confidence. According to observers however, it is mainly a devious move to counter a move by Carrefour.


Need for consolidation

There has been much speculation about a possible deal between the two groups: a year ago, Casino announced that it had been approached by its competitor, but Carrefour formally denied it. Yet there is a logic: Alexandre Bompard sees a need for further consolidation in the food retail sector. Moreover, he fears that a possible dismantling of the Casino group would mainly benefit his direct competitors - groups like Auchan or E.Leclerc would be able to buy parts.


Analysts calculated that a merger could create synergies worth 0.7 to 1.1 % of turnover, around a billion euros - which would increase operating profit by 30 %. Such a merger group would have a market share of around 30 % in France and even 50 % in Brazil, but the question is whether the competition authorities can live with such a dominant group. On the French market, there is a large overlap between the two retailers, especially in the proximity segment. A possible merger would in any case lead to the divestment of a large number of stores.