Rallye Extends Gains on Casino Buyout Speculation, Short Squeeze
Rallye shares have been climbing for a mix of reasons, including speculation Casino will be bought out, says Ion-Marc
Valahu, co-founder of Geneva-based Clairinvest
By Albertina Torsoli
(Bloomberg) — Shares in Rallye jumped for a third session amid a short squeeze and persisting speculation that Casino, the troubled French retailer that Rallye controls, may be acquired, according to investors.
* Rallye shares up 12% to EU8.32 at 12:54 pm in Paris, after being halted for excessive volatility earlier
** This adds to the ~17% increase of the previous 2 sessions
** Rallye shares have more than doubled in the past month
** Casino shares fall 2.5% to EU44.85, reducing its YTD gains to ~23%
* Rallye shares have been climbing for a mix of reasons, including speculation Casino will be bought out, says Ion-Marc Valahu, co-founder of Geneva-based Clairinvest
** Rallye, which got creditor protection in May, would benefit from a potential sale, Valahu writes in an email in response to a Bloomberg query
*** NOTE: Yesterday, Casino Cut at Oddo, Which Says ‘Countdown’ Begun for Its Sale
** Short covering also is helping the stock, as is “a move from defensives into value or most shorted stocks,” added Valahu, who sold his position in Casino last week
** Short interest in Rallye is 11.6% of free float, down from 21% in May: Markit
* Carrefour’s denial that it has an offer on the table for Casino doesn’t mean “there will not be one in the future,” according to Louis Capital Markets.
* “It is our understanding that there are no talks going on between Carrefour and Casino,” and there have been no meetings between the CEOs, Louis Capital wrote
** Still, Carrefour CEO Bompard is interested in deals and “we know that the CEOs did in fact meet approximately one year ago regarding a possible tie up,” Louis Capital risk-arbitrage analyst Ben Kelly wrote in the note
** NOTE: Carrefour shares down 1.5% in Paris
** Short interest in Casino remains high and further share-price strength will mean the short squeeze continues: Louis Capital
** NOTE: Casino short interest was ~37% of free float as of Sept. 13: Markit
* Clairinvest’s Valahu says he sold the shares since “a lot of good news was priced into Casino” already
** “Debt has been coming down and a new shareholder came in which added to possible M&A but I think all was reflected in the
stock price so we took our profits:” Valahu
* NOTE: On Sept. 5, Kretinsky’s Casino Stake Fuels M&A
Speculation: Street Wrap