Naouri Casino Rallye

Groupe Casino (CO FP) is one of the most overvalued and misunderstood companies we have ever come across. The basic problem with Casino is that its financial statements are literally meaningless to understanding the company’s (poor) health. They do not distinguish between what Casino owns and what it owes. (Spoiler: we estimate Casino’s LTM leverage ratio at 8.9x.)

Naouri acquired controlling shares in Casino after it merged with Rallye in 1998. Jean-Charles’s son, Gabriel Naouri, is an entrepreneur and was previously deputy head of international operations of Groupe Casino until 2017. Casino Chairman and Chief Executive Naouri in May placed the retailer's parent companies Rallye, Finatis and Fonciere Euris under protection from creditors in a bid to save the group from collapse.

Casino’s controlling shareholder Jean-Charles Naouri is a genius. He won first prizes in France’s high school Latin and Greek exams, completed his baccalaureate degree at 15, and earned a PhD in math in only one year. Like the geniuses who founded the hedge fund Long-Term Capital Management, which spectacularly collapsed, Mr. Naouri has an affinity for leverage. One would expect Casino to be a relatively boring hypermarket retailer; however, together with its parent, Rallye SA (RAL FP), Casino increasingly resembles a highly levered hedge fund. One example is Casino’s total return swaps on listed equities, which we estimate have a mark-to-market loss of approximately €500 million.

Casino and Rallye are now experiencing their version of a “six sigma event”, with emerging markets (80% of consolidated EBITDA) unwinding, currencies selling-off, and a sharply deteriorating core business. Casino obfuscates these problems by (i) adding complexity to its already convoluted structure and financials, (ii) engaging in financial engineering to improve the optics of its financials, and (iii) by hollowing out the productive value of the businesses in order to keep Rallye from collapsing.

Shares in indebted French supermarket group Casino and its parent Rallye were suspended on Thursday pending a statement, fuelling speculation of a debt restructuring that could weaken the grip of retail kingpin Jean-Charles Naouri. Prior to the suspension, shares in Casino, which is grappling with tough.

Our report peels away many layers of the onion to show that Casino is dangerously leveraged, and is being managed for the very short-term. We explain that Casino’s shares are worth as little as €6.91, and correspondingly, the shares of Rallye are likely going to zero. If Casino trades at our estimated value of €6.91, the recovery on Rallye’s bonds should be about €0.15.

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1. Back in April, we determined that Mr Naouri's crucial tier - Rallye SA - was now in negative equity, as its debt far outweighed the value of its Casino stock and other holdings.
2. Finally, Jean-Charles Naouri will propose to the Board of directors of Casino, Guichard Perrachon to submit to the next general meeting of shareholders a resolution in view of the appointment of a.

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Jean-Charles Naouri (born March 8, 1949 in Bône (now Annaba), Algeria) is a French businessman. He is Chairman, Chief Executive Officer and controlling shareholder of Groupe Casino.^[1]

Education[edit]

Naouri received his baccalaureat degree at only 15 years old. He then studied in classes préparatoires at the Lycée Louis-le-Grand before entering the École Normale Supérieure in 1967. He also attended Harvard University, before returning in France and completing a PhD in Mathematics in only one year. He is also an alumnus of the Ecole Nationale d’Administration (1974-1976).^[2]

Early career[edit]

Civil servant[edit]

After graduating from ENA in 1976, Jean-Charles Naouri joined the Inspection générale des finances (France), the auditing and supervisory body of the French Administration. From 1982 to 1986, he served as chief of staff for Pierre Bérégovoy, both at the Ministry of Social Affairs and National Solidarity and the Ministry of Economy, Finance and Budget.^[3] During this period, he was the architect of the reforms implemented in the French financial markets, which included the creation of the MATIF futures and MONEP options markets and the introduction of certificates of deposit and commercial paper. In particular, he helped drive the financial market liberalization with measures to ease currency controls and eliminate credit restrictions.

Rothschild & Cie Banque[edit]

In 1987, Jean-Charles Naouri left government service and joined Rothschild & Cie Banque as Managing Partner.^[4] Around the same time, he established his own investment fund, Euris, which acquired minority equity investments in industrial companies, while increasing its investment capabilities.

Global retailing[edit]

Rallye[edit]

In the early 1990s, Jean-Charles Naouri shifted his investment strategy from opportunistic to acquiring strategic stakes. As part of this new strategy, in 1991 he acquired the Brittany-based retailer Rallye, which at the time was facing serious cash flow issues/challenges. Convinced of the future potential for retailing and the benefits of combining the two companies, in 1992 he engineered a merger of Rallye with Groupe Casino, thereby becoming Groupe Casino's largest shareholder.

Groupe Casino[edit]

In 1997, a hostile takeover bid for Groupe Casino by rival retailer Promodès^[5] was thwarted by the successful counter offer ^[6] from Jean-Charles Naouri, the Guichard family and Casino management, thereby maintaining the Group's independence.

In March 2005, Jean-Charles Naouri became Chairman and Chief Executive Officer of Casino Group,^[7] leading a substantial transformation of the retailer's profile by disposing of underperforming business segments in Poland, the United States, Taiwan and the Netherlands and strengthening the Group's presence in fast-growing markets. This made Casino the leading food retailer in South America (especially Brazil and Colombia), the Indian Ocean and Vietnam and the second largest in Thailand.

In France, Jean-Charles Naouri has refocused French operations in the convenience format segment, Groupe Casino's core business, and also positioned Casino in the discount segment by developing the Leader Price chain and the Cdiscount e-commerce website acquired in 2000.

Naouri Casino Rallye Bingo

In 2012, Groupe Casino acquired a controlling interest in Brazilian retailer Pão de Açúcar, the country's largest private-sector employer.^[8] The Group also purchased the 50% of French retailer Monoprix, which it did not already own, becoming the sole shareholder.^[9]

Social responsibility commitment[edit]

In addition to his business activities, Jean-Charles Naouri is also the founder of the Euris Foundation, which he created in 2000. Each year, the Foundation grants 40 scholarships to promising high school graduates from impoverished neighbourhoods in France.^[10]

He is also Vice Chairman of the Groupe Casino corporate foundation, which he founded in 2009 to improve access to culture and knowledge for children who are disadvantaged or suffering from illness.In addition, he is Honorary Chairman and Trustee of Ecole Normale Supérieure's Institut d’Expertise et de Prospective,^[11] which is responsible for developing ties between the school and the corporate world.

In June 2013, Jean-Charles Naouri was appointed by France's Ministry of Foreign Affairs to be a special representative for Economic relations with Brazil.^[12]

Positions[edit]

• Chairman and Chief Executive Officer of Groupe Casino, a listed company
• Chairman of the Board of Cnova N.V.
• Chairman and Chief Executive Officer of Euris
• Chairman of Rallye, a listed company
• Chairman of the Board of Directors of Companhia Brasileira de Distribuicao (CBD), a listed company
• Vice-Chairman of the Casino Group Corporate Foundation
• CEO of Casino Finance
• Chairman of the Euris Foundation

Naouri Casino Rallye Entertainment

Other positions[edit]

• Board Member of Financière Marc de Lacharrière (FIMALAC)
• Member of the Advisory Committee of Banque de France
• Chairman of Association Promotion des Talents, a non-profit organisation
• Honorary Chairman and Director of Institut d’Expertise et de Prospective (Ecole Normale Supérieure)

Net worth[edit]

In 2015, Jean-Charles Naouri was ranked by Forbes Magazine as being worth $1.2 billion dollars. ^[13]

References[edit]

1. ^Jean Charles Naouri - Executive profile, Bloomberg Businessweek]
2. ^Jean-Charles Naouri - Brief biography, Reuters
3. ^Casino indiser : Jean-Charles Naouri, Macroaxis
4. ^Bookish Frenchman becomes Brazil retail kingpin, Chicago Tribune,June 21, 2013
5. ^French Grocery Chain Raises Hostile Bid, the New York Times, September 26, 1997
6. ^Casino Guichard-Perrachon S.A. History, Funding Universe
7. ^Jean-Charles Naouri becomes CEO of Casino, Retail Analysis, March 24, 2005
8. ^Casino to Become Sole Controller of Brazil’s Pao de Acucar, Bloomberg, May 15, 2012
9. ^Dean Best, Casino's Monoprix acquisition cleared, Just Food, July 10, 2013
10. ^L'excellence des lycéens défavorisés récompensée, Le Figaro, October 22, 2010
11. ^Jean-Charles Naouri est nommé président de l'Institut d'expertise et de prospective de l'Ecole normale supérieure, Les Echos, January 22, 2001
12. ^Jean-Charles Naouri appointed special representative for economic relations with Brazil, International supermarket news, August 21, 2013
13. ^https://www.forbes.com/profile/jean-charles-naouri/#120ea9854bd9