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. Taking control of the supermarket alliance with Casino would allow InVivo to fill an old frustration of French cooperatives to be able to be present along the food chain from farmers to retailers, Blandinieres said. "Cooperatives have been trying to develop in the food industry for years. They missed the boat in the 1970s," Blandinieres said. "We told ourselves this could be a chance today with InVivo, with Teract and perhaps tomorrow with this partnership with Casino to realize this dream for the cooperative world," he said.
EQUITY INVESTMENT 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. "We need 500 million euros of capital expenditure (capex) to deploy new retail concepts," Blandinieres said. "It would be over five years. We need to renovate stores, restore market areas, bakeries, make them more attractive," he said. These would mostly be financial investors, Blandinieres added, declining to give further details. Teract would include its garden shops Jardiland in the listed group. A new entity, called "Teract Ferme France" to be controlled by InVivo, would be in charge of supplying local agricultural products through short food supply chains.
Teract was established last year through the merger of InVivo's retail business, with an acquisition vehicle backed by French telecoms billionaire Xavier Niel. The aim for Teract has been to be less reliant on seasonal gardening sales and over time to generate half of its profitability from food, Blandinieres said. (Reporting by Gus Trompiz and Sybille de La Hamaide, Editing by Louise Heavens and Aurora Ellis)
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