Bryan, Garnier & Co struggles to see rationale behind Casino-Teract merger talks

Teract SA

02/02/2023 10:48

** Bryan, Garnier & Co's analyst Clement Genelot struggles
to understand the rationale behind a potential merger between
retailers Teract  TRACT.PA  and Casino  CASP.PA  
    ** The retailers confirmed on Wednesday they had begun
exploratory discussions that could lead to a merger of their
distribution activities in France
    ** Shares in retailer Teract edge up 4% while peer Casino
 CASP.PA  slips around 1%, reversing earlier gains    
    ** Genelot attributes the stock reaction to a "relief of
sorts", with lower risks of default or safeguard procedures
    ** He notes however that Casino's debt will remain a problem
and that the share price rebound remains limited
        ** "We continue to see the same structural issues ... to
face the group's debt refinancing deadlines while the
shorter-term will remain affected by an upcoming poor FY
publication in terms of FCF", Genelot says in a note
    ** "We struggle to understand why Teract would accept to
become liable for Casino France Retail's massive net debt," he
adds
    ** He also notes a potential merger would bring no new money
to Casino while operational synergies look minimal if not
inexistent, while being "a clear sign of weakness" and "the
beginning of the end" for Casino's boss Jean-Charles Naouri
 (Reporting by Diana Mandiá)
 ((diana.mandiaalvarez@thomsonreuters.com))