Casino takeover battle: Kretinsky in the lead

Who will save French supermarket group Casino? Czech investor Daniel Kretinsky and French entrepreneur Xavier Niel both put in bids, but the question is how much there is left to salvage.

Significantly better bid

Casino is in urgent need of a new capital, otherwise it will succumb to its 6.5 billion euros of debt. Two rival groups are trying to save the ailing group: Kretinsky is offering 1.35 billion euros, while a French trio of entrepreneurs leaves it at 900 million euros.

Kretinsky – and billionaire Marc Ladreit de Lacharriere (the Fimalac holding company) – want to bring in 860 million euros of additional capital themselves, but promise that creditors would add 290 million euros and existing shareholders would invest another 200 million. All unsecured debt would be converted into equity, as would 1.5 billion euros of secured debt, reducing the group’s debt by more than 4.5 billion euros.

Exit founder Naouri?

That bid is a lot higher than that of French triumvirate Xavier Niel, Matthieu Pigasse and Moez-Alexandre Zouari, who said they would be going all in to save the group “out of patriotism”. The trio is proposing “only” 450 million euros in new share capital: the other half would be a new loan, albeit under very strict financial conditions. Only 300 million euros of Casino’s secured debt would be converted into equity, according to the proposal.

However, investors and shareholders are not very enthusiastic about either bid, as hardly anything would be left for them. What is already certain is that founder and chief executive Jean-Charles Naouri would lose control of his company in both scenarios, while a major restructuring plan is yet to follow anyway.

Casino aims to have said recovery plan ready by the end of July, but a deal must come out first. For that deal, the group needs the agreement of creditors. Today, the supermarket group is sitting down with bondholders and the French finance ministry to discuss the two bids.