Casino/Green Yellow - comment

With the deadline for preliminary bids for GreenYellow set for mid-June, press speculation is rife over the number and type of bidders that is emerging for GreenYellow. Initially, yesterday morning a negative news story was released from BFM TV stating that industry players are unlikely to participate in the bidding process. Although the press report acknowledged the presence of five investment funds who are likely to submit a bid, they quote several industry players who talk down the potential sale price of GreenYellow. This news report caused the shares to drop c.6% in early day trading.

Subsequently, further press reports stated sources acknowledged that Casino had received three preliminary offers, with bids close to €1.5bn, with Macquarie, I Squared Capital and SHV, a Dutch entity all reportedly having submitted bids. Other parties have asked for more time to submit a possible offer. This subsequent report, which was likely planted by sources close to the Company, in order to shore up the equity price and somewhat achieved this, leaving the shares down 4% for the day.

As we stated previously we expect further press speculation over the coming weeks. Although difficult to be certain of any asset sales by Casino, we believe that the sales process is likely to complete, given the overall leverage concerns at Casino. However, we remain doubtful over the €1.5bn price tag.

Separately, the BFM TV news story mentions the €50m of bank debt falling due at Foncière Euris in 2022. Technically, this could be funded by an exceptional dividend from Casino (via Rallye) under the terms of the Casino debt, we do not expect it to happen given the tightness of the covenants. An extension from the banks is most likely given it is likely the same banks exposed across Casino and Rallye if the GreenYellow asset sale fails.