Casino: billionaire bust-up should retrieve more value for shareholders

The end game for debt-laden Casino was never going to be pretty or straightforward. But a brewing battle between billionaires could help investors salvage the best from a dire situation. It may also wrest control of France’s seventh-biggest supermarket chain from veteran retailer Jean-Charles Naouri.

Whatever the outcome, there is already a conclusion of sorts: even retailing brilliance cannot save a business from the corrosive effects of excessive leverage.

Three French tycoons, including telecoms billionaire Xavier Niel, have hatched a plan to strengthen Casino’s equity by up to €1.1bn. About €200mn to €300mn would come directly invested from the trio, whose other members are entrepreneur Moez-Alexandre Zouari and banker Matthieu Pigasse.

The remainder would be covered by unknown “partners” — including creditors willing to swap debt for equity. This would leave current shareholders with just 39 per cent.

Casino has been struggling for years. It has €5.1bn of net debt, despite disposals. About €3bn of loans and bonds are due in the next two years. Moody’s has warned of a potential default in the next 12 months. Sales in its core French market are falling.

Casino, controlled by Naouri through a chain of companies, began restructuring negotiations with its creditors in May. Talks over a rescue tie-in with smaller rival Teract foundered this month.

The group’s second-biggest shareholder, Czech billionaire Daniel Křetínský has meanwhile pitched a €1.1bn investment. News outlet La Lettre A reports a more detailed offer may be pending.

A billionaire-on-billionaire battle should preserve a little extra value for shareholders.

Casino still has about 53,000 employees. A deal led by three French businessmen should please politicians fearful of asset stripping and redundancies.

Whoever takes control will have their work cut out. Casino’s stores desperately need investment. More price-cutting may be required to avoid further market share losses.

The battle for control could drag on for months. Only then can the fight to revive Casino’s operations begin.