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Casino and Teract begin merger discussions

Monoprix, une enseigne Casino

This would be a match made in heaven between an urban giant and a suburban specialist. An alliance between Casino and Teract is currently being explored. The talks, which started at the beginning of March, have once again put the spotlight on the possibility of a shake-up in the French retail sector. Experts from AURIS Finance, a consultancy firm specialising in mergers and acquisitions, break down the story.

Creating the French leader “in responsible and sustainable retailing”: This is how the Casino Group announced the signing of an exclusive agreement with Teract in a press release published on 9 March. The agreement would allow “the creation of joint supply chains”, thus giving the Casino Group’s brands better control of their value chain.

The Teract network comprises nine brands in the gardening, pet care (Jardiland, Gamm Vert, Delbard, Jardineries du Terroir and Noa) and food sectors (Boulangerie Louis, Grand Marché, Frais d’ici and Bio&Co) and has around 1,700 points of sale in France. The Group reported revenues of €335.8 million for the first half of the 2022 – 2023 financial year. For its part, the Casino Group is characterised by its chain of brands located in urban centres, the mainstay of which is Monoprix, along with Franprix, Casino and Naturalia. The Group currently has 9,000 points of sale in France and employs around 200,000 people worldwide. In 2022, Casino has achieved an operating profit of €1.2 billion. The French retail giant, still burdened by its debt reaching €6.4 billion by the end of 2022, has embarked on an international asset disposal strategy.

A synergy of talents

This is an alliance of two complementary players, not only in terms of geographical positioning, but also in terms of formats and diversity of activities. Although the outlines of the merger remain unclear for the time being, the two groups are putting forward the idea of two separate entities: one controlled by Casino, which will consolidate the retail activities in France, and the other called Teract Ferme France, controlled by InVivo (Teract’s majority shareholder), which will be in charge of the supply of agricultural, local and short supply chain products. One of the characteristics of the Casino Group is that it has 2,800 own-brand food products. Joining forces with a player such as Tercat could accelerate the development of in-house products in a context of inflation and tense negotiations with suppliers. The announcement that the two companies would enter into exclusive negotiations was very well received by financial markets, with Casino and Teract shares rising sharply.

A strong trend towards market concentration

This announcement has not gone unnoticed. Indeed, the retail sector at large has been the victim of major market concentration movements for several years. If family-owned and independent groups are not candidates for merging, others, such as Carrefour, are actively seeking consolidation. The merger between Casino and Teract is unique in that it focuses on perimeters that are sufficiently distant to make competition issues manageable.

AURIS Finance experts at your side

Consolidation among the retail giants will undoubtedly have an impact on the entire value chain, from producers to suppliers. AURIS Finance’s experts are specialised in each sector and will assist you in your sale and acquisition projects.

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