Tesco bid for French store group ruled out

Analysts yesterday ruled out a Tesco takeover move for Casino, the French supermarket group, as a second bid was tabled for the company. Rallye, the retail group yesterday launched a counter offer for Casino, hoping to see off a rival pounds 2.9bn bid for the group launched last week by Promodes.

Shares in Tesco dipped slightly on stock market rumours that the UK grocery giant might be preparing a strike. The company declined to comment on the speculation ahead of its half-year results on Tuesday.

But analysts said an offer was unlikely as Tesco was preoccupied with its recent acquisition of stores in Ireland as well as its growing interests in central Europe. It already owns the Catteau supermarket chain in France but has been struggling to expand due to planning restrictions.

Rallye, which is controlled by the Euris group, already owns 28.8 per cent of Casino's share capital and 36 per cent of the voting rights, had said it opposes Promodes' Fr340 per share bid for Casino. Promodes had simultaneously launched a bid for Rallye.

Rallye is offering a Fr347 cash payment per Casino share with an alternative involving bonds. Rallye said its offer was clearly superior to Promodes. Promodes responded by saying that Rallye's offer was merely a "complex financial bid".

Promodes offer would have made it the largest retailer in France.