Press - 2015

Paris, 21 December 2015. Casino Group affirms the strength of its business model, strategic plans and financial structure On December 15th, 2015, Casino Group announced a plan to strengthen its balance sheet and enhance its financial flexibility with a deleveraging plan of more than €2bn through real estate transactions and disposal of non-core assets.

On December 17th, after having acquired significant short positions on Casino, Muddy Waters Capital issued a report questioning Casino Group’s strategy, financial strength and long term value.

Muddy Waters Capital’s report contains a number of false and misleading allegations, intended to negatively impact the trading prices of Casino’s stock and debt, for the benefit of the report’s author who, in his own words, should be assumed to have “a short position in all stocks (…) and bonds covered [in the report], and therefore stands to realize significant gains in the event that the price of either declines.”

Casino has become aware, through a press agency wire, of a report issued by Muddy Waters Capital on December 16, 2015, with the obvious intent to harm Casino, its employees and its shareholders.

This accusatory report contains grossly erroneous allegations that the Group will answer in detail.

In light of this dissemination of misleading information, Casino Group has filed a claim with the Autorité des Marchés Financiers and reserves the possibility to exercise its rights before national courts, including criminal courts.

Casino Group decides to strengthen its financial flexibility with a deleveraging plan in 2016 of more than 2 billion of euros, mainly through real estate transactions and disposal of non-core assets.

One of this plan’s components consists in externalizing the value of the Group’s real estate portfolio through the participation of investors to its real estate activities in Thailand and Colombia.

In Thailand, Big C owns almost 800,000 sqm of GLA in its shopping malls located in prime areas all across the country.
In Colombia, Éxito’s real estate activity includes more than 300,000 sqm of GLA (excluding hypermarkets).

Those transactions will create value for all shareholders and will enable both companies to pursue their development on their respective markets where they already own leading positions. Big C Thailand and Éxito will continue to fully consolidate their real estate activities.

The diposals of non-core assets include in particular the project to sell the Group’s operations in Vietnam.

Casino Group will thus continue to focus on its growth strategy in its key markets in France, Latam and Asia around buoyant assets. Combined with the expected progression of free cash flow after dividends* in France, this deleveraging program will contribute to significantly improve its financial structure.

Creation of ICDC Services joint venture The Casino and DIA Groups have decided to join forces internationally to boost their competitiveness relative to major suppliers of national brand food products. The partners will be offering them access to a unique portfolio of global services (e.g., data sharing, country development assistance, etc.), while combining their expertise and the synergies that exist between their geographic locations and store In addition, the partners have agreed to coordinate purchasing negotiations for their private-label brands in Europe, with the aim of ultimately pooling around 50% of volumes. One of Europe’s largest private-label platforms is thus being created, to open up additional markets to existing suppliers and also improve the product offering available to consumers.

The alliance will take effect, subject to the approval of the relevant competition authorities (where needed), starting with the 2016 round of purchasing negotiations, via a new joint venture, ICDC Services. It will be created in addition to the two Groups’ existing purchasing partnership agreements, which will remain unchanged.

Accelerated growth in sales in France

Increase in food sales in Latin America

• In France, a significant improvement in all banners, with all now recording higher sales and customers: sales at +2.6% on an organic basis and +2.4% on a same-store basis. Customers up +3.7%.
  • Géant, growth of +3.9% (same-store and organic) with gain of market share of 0.1pt. Customers up +5.0%.
  • Leader Price, growth of +3.1% (on an organic basis) and +2.3% (on a same-store basis) with gain of market share of 0.2pt. Customers up +9.2%.
  • Monoprix, sustained growth of +4.6% (on an organic basis) and +2.2% (on a same-store basis). Customers up +1.1%.

• Internationally:
  • In Latin America:
    • Food sales rose +5.2% on an organic basis and +2.4% on a same-store basis; solid performance for GPA Food (+6.3% on an organic basis) despite the economic slowdown.
    • Via Varejo’s sales still impacted by the sharp decline in consumption in Brazil.
  • In Asia, sales down under the impact of the events in Thailand in August; sales volumes controlled.

• E-commerce : GMV increase of +17.6% at constant exchange rates.

As a result of the new organization of the Casino group in Latin America, Éxito closed today the acquisition from Casino group of 50% the ordinary voting shares of its subsidiary GPA in Brazil, representing around 18.8% of the total capital of the company, and a 100% stake in Libertad (subsidiary of the Group in Argentina). The transaction was approved by the Shareholders’ general meeting and the Board of Directors of Éxito.

Casino and Éxito agreed on shareholders’ agreements in order to organize the control of GPA. A summary of the contracts related to the transaction is available on the following link: http://old.groupecasino.axome.cc/en/press-releases/shareholders-agreements-for-segisor-wilkes-and-grupo-pao-de-acucar/

With the wealth of its brands and positions in Latin America, this new organization of the activities around Éxito, enables the Group to follow its strategy of growth and profitability at a rapid pace, strengthening its commercial presence in the region.

Éxito obtained on 18 August, 2015, the approval from its Shareholders’ general meeting regarding the acquisition from Casino group of 50% the ordinary voting shares of its subsidiary GPA in Brazil (representing around 18.8% of the total capital of the company), and a 100% stake in Libertad (subsidiary of the Group in Argentina). The transaction was announced on July 30, 2015.

– Strengthened organization, focused on growth drivers,

– Implementation of significant synergies leveraging the respective strengths of the different entities,

– Acquisition by Éxito of 50% of GPA voting shares owned by Casino group and 100% of Libertad in Argentina for a total amount of € 1.7 billion,

– Rebalancing of the Group’s debt structure

Casino Group is changing its organization by regrouping all its operations in Latin America. This new organization will be set up around its Colombian subsidiary Éxito and will enhance the Group’s future growth prospects in Latin America.

Casino Group has entered into a share purchase agreement with Éxito for the disposal to the latter of the following:

• a 50% stake in the French company holding the ordinary voting shares of its Brazilian subsidiary GPA, representing around 18.8% of the total capital,
• a 100% stake in Libertad (subsidiary of the Group in Argentina).

Following this transaction, Éxito will fully consolidate all the Latin American activities of the Casino Group (Brazil, Colombia, Argentina and Uruguay). This entity will cover markets representing 280 million inhabitants and will be a leading retail Group in the region positioned to follow the evolution  of the customers’ needs and seize regional consolidation opportunities. This new organization  will be composed of a unique combination of countries and formats:

• leadership positions of the companies in their main markets: #1 in Brazil, #1 in Colombia and #1 in Uruguay,
• combined 2014 sales of c. € 26.5 billion and EBITDA of € 2.0 billion,
• comprehensive coverage of all customer segments, with specific banners and an expertise in a mix of formats (hypermarkets, supermarkets, convenience, cash & carry, discount and specialised distribution…),
• best-in-class multi-channel network which would enhance e-commerce development thanks to a network of over 2,500 stores.

Casino Group, which owns 54.8% of Éxito, will remain its controlling shareholder and will keep fully consolidating its subsidiaries Éxito and GPA. Depending on market conditions, the Casino Group reserves the possibility to acquire shares of its Latin American subsidiaries in the market over the next months.

Casino and Éxito agreed on shareholders’ agreements in order to organize the control of GPA. The composition of the Board of Directors of GPA will reflect the new ownership structure with the appointment of directors by Éxito. There will be no change in the management structure of GPA as a result of this transaction.

This new organization will create value for all the subsidiaries thanks to the implementation of synergies and best practices with a run-rate impact of €145 million, representing around 0.5% of the combined sales.

55% of the synergies will directly benefit Brazilian operations while 45% will directly benefit Colombian, Argentinean and Uruguayan operations, and these synergies will be implemented by a dedicated committee composed of key executives of Éxito, GPA and Casino Group.

The total transaction value amounts to € 1.7bn, based on a price per GPA share of R$100, implying a premium of 20.6% over the last 3-month average of GPA share price of its preferred shares, and a multiple of 2014 sales of 0.55x for Libertad.

Éxito will finance the transaction by using part of its existing available cash and new credit facilities.

This transaction will lead to rebalancing Casino Group’s debt structure, in a consistent way with the strong cash-flow generation of the Latin American subsidiaries:

• sustainable and optimized balance sheet for Éxito (consolidated net debt close to nil post transaction),
• significant deleveraging at Casino group parent company level (€1.7bn).

The impact on Casino Group’s net income is expected to be neutral when factoring run-rate synergies. The related accretion on Éxito’s net income is expected to be over 5% before synergies and around 30% when factoring run-rate synergies.

The transaction is supported by the Boards of Directors of Casino Group, Éxito and GPA.

The transaction is expected to be completed by end of August 2015. The transaction is subject to the approval of Éxito’s shareholders at a general shareholders meeting which is convened for August 18, 2015.

– Éxito will comment the transaction during the presentation of its half year results at 4pm (CEST / Paris)

Dial-in details: + 70 66 34 65 60 – pin code 83373602

– Casino Group will comment the transaction at 5pm (CEST / Paris)

Dial-in details: +33 1 72 00 09 86 – no pin code

30-07-2015-New-organization-for-the-Group’s-operations-in-Latam1

Group consolidated sales of €23.7bn, up +1.8%

• In France:
  • Return to organic growth in Q2 2015 (+0.4%)
  • The two banners which significantly repositioned their prices, Géant and Leader Price, confirmed their recovery
• Internationally:
  • Strong performance in the food retail business, particularly in Latin America
  • Against a backdrop of macroeconomic slowdown and base effect, Via Varejo reported lower sales, but continued to gain market shares
• E-commerce: Cnova’s gross merchandise volume (GMV) continued to grow (+26.8% at constant exchange rates in H1 2015) driven by the development of marketplaces

Group trading profit of €521m, down compared with H1 2014

• In France, significant residual impact of previous price cuts on the sales margins of Géant and Leader Price; this impact will wane in H2 2015
• Internationally, macroeconomic slowdown and base effect in Brazil affecting the margins of GPA Food and Via Varejo in Q2 2015
• E-commerce: impact of the investments made in Q1 2015 to drive growth (infrastructure, logistics, etc.)

Increasing Net profit Group share of €75m and lower Underlying net profit Group share of €63m.

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