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By Gus Trompiz and Sybille de La Hamaide
PARIS, March 10 (Reuters) – Agribusiness cooperative InVivo wants to have the possibility in the medium term to take control of a French retail grouping being negotiated between Casino CASP.PA and Teract TRACT.PA, InVivo Chief Executive Thierry Blandinieres said on Friday.
Debt-laden supermarket chain Casino and smaller food retailer Teract, which is majority owned by InVivo, have entered exclusive talks aimed at creating a retail network controlled by Casino and a food business controlled by InVivo.
“We’re taking a minority stake but we could become the majority owner in future,” Blandinieres said of the potential retail tie-up between Casino and Teract.
“It would be a potential option in a three to five year timeline,” he told Reuters.
Announcing their exclusive negotiations late on Thursday, Casino and Teract said that the activities they would bring to the merger were valued, respectively, at 85% and 15% of the entity on a debt-free, cash-free basis.
Blandinieres declined to estimate what minority stake InVivo may acquire initially in the food retail grouping, saying it would also depend on debt and other financial adjustments.
Casino, controlled by French businessman Jean-Charles Naouri, has been selling assets to cut its debt and reassure investors. It reported consolidated net debt of 6 billion euros ($6.41 billion) for the end of 2022.
InVivo is seeking to limit the amount of Casino’s debt attributed to the planned French retail business so that its initial debt over core earnings (EBITDA) ratio does not exceed around 2-2.5, Blandinieres said.
Casino and Teract also specified in their announcement that 500 million euros in equity would be injected in the new venture to support growth and talks with investors were under way to also become shareholders.
These would mostly be financial investors, Blandinieres added, declining to give further details.
(Reporting by Gus Trompiz and Sybille de La Hamaide, Editing by Louise Heavens and Aurora Ellis)
((gus.trompiz@thomsonreuters.com; +33 1 49 49 52 18; Reuters Messaging: gus.trompiz.thomsonreuters.com@reuters.net))
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