Casino to sell Big C stake to Thai TCC Group
Groupe Casino has agreed to sell its stake in Thailand’s Big C Supercenter to the country’s TCC Group for €3.1bn excluding debt in a deal that will help the French retailer halve its net debt.
Casino, whose shares have come under pressure in recent months over its leveraged position, said on Sunday that the deal would allow it to reduce its debt by €3.3bn, including roughly €200m of Big C debt that Casino had on its books.
The transaction to sell Casino’s 59 per cent stake values hypermarket operator Big C at THB 252.88 a share, a 28 per cent premium compared with the share price on January 14.
Casino said that it expected the deal to close at the end of March
If completed, the deal would add to a string of recent acquisitions by TCC, which is controlled by Thai billionaire Charoen Sirivadhanabhakdi, the country’s richest man.
Big C, which has a market capitalisation of nearly €4.bn, operates more than 700 stores in Thailand, including 125 hypermarkets, with revenue of €3.4bn last year.
Sunday’s announcement fulfils most of Casino’s recent commitment to sell €4bn in assets this year as it seeks to pay down its €6bn of net debt. In addition to selling its Thai assets, the group is looking to offload its operations in Vietnam.
Last month, the French group, which also has significant operations in Brazil, came under pressure as rating agency Standard & Poor’s (S&P) put the French retailer on “negative watch”, causing its shares to tumble. The group’s shares have almost halved during the past 12 months.
S&P had signalled its concerns about the French retailer. “The group’s profitability will continue to be fairly weak for an extended period of time and its debt levels, primarily located at the French operations, too high,” the rating agency wrote in a report.
It placed Casino’s long-term BBB- and short-term A3 debt ratings on credit watch, adding that it could lower the long-term standing “by no more than two notches” — a move that would downgrade the group’s debt rating to “junk” status.
That came after Casino’s stock plunged more than 10 per cent in December after short seller and research firm Muddy Waters described it as one of the “most overvalued and misunderstood” companies it had ever studied.
One of its criticisms was that accounting at the group, which operates a string of different supermarket formats in France, including Monoprix and Leader Price, was “misleading” because the company consolidated assets in which it owned only a small stake.
The effect, argued Muddy Waters, made Casino appear less leveraged than it really was.
Casino’s parent and biggest shareholder is Rallye, which holds 48.4 per cent of the group. It uses dividends from Casino to service its net debt of roughly €2.4bn.
In the days that followed Muddy Waters’ report, Casino struck back with a detailed argument of its own and saying that it had “solid business dynamics” and manageable debt levels.
Last month, Casino reported fourth-quarter sales of €11.8bn, 2.7 per cent lower on a like-for-like basis than 12 months earlier — but higher than the €11.6bn analysts had expected.