French retailer Casino Guichard Perrachon SA is in advanced talks to sell its Leader Price discount chain to German low-cost rival Aldi, a source has revealed.
On Saturday (11 January), the source said both parties agreed on a €750 million value for Leader Price, but the deal is not yet signed.
Casino declined to comment on the matter. Aldi did not immediately reply to a request for comment.
In September, Casino confirmed media reports saying the French retailer was talks with Aldi to sell Leader Price.
The move comes as Casino chief executive and controlling shareholder Jean-Charles Naouri is hunting for ways to ease the company's debts – and those of parent company Rallye, which placed under protection from creditors in May – via asset sales and refinancing efforts.
Knock-On Effect
Commenting on the potential transaction's impact on the UK market, in which Aldi has a growing presence, analyst Clive Black of Shore Capital said, "The relevance of such a transaction to the UK grocery sector to us is set in the greater scale still that Aldi may be able to drive in European private label production and so its cost of goods, most particularly in longer life categories such as ambient grocery, frozen and household goods.
"Such scale could be helpful to production efficiencies and so price setting and margin abstraction (positive operational gearing) across its European platform."
Disposal Plan
Casino is engaged in a €4.5 billion disposal plan to deleverage the company amid a tough business environment. The group is expected to announce fourth-quarter sales on 16 January.
Along with domestic peers such as Carrefour and Auchan, it faces intense price competition in its home market as well as challenges from online players such as Amazon.
In Latin America, Casino kicked-off in June a plan to simplify the complex shareholding structure for its Latin American operations.
The restructuring would result in Casino controlling its businesses in Brazil, Colombia, Uruguay and Argentina through a 41.4% stake in Brazilian unit GPA.
