Casino hits back at Muddy Waters report

French supermarket operator Casino Guichard-Perrachon hit back on Monday at last week’s damning report by research firm Muddy Waters Research, which said it was “one of the most overvalued and misunderstood companies” it had ever come across.

Muddy Waters, which was founded by renowned short-seller Carson Block, said last week that it was short shares of Casino because their value could be as little as €6.91 per share, which was 86.2% lower than its last close.

The company, whose shares fell sharply following the report, said: “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 realise significant gains in the event that the price of either declines’.”

Casino said it has solid business dynamics, with its performance driven in particular by the accelerating recovery of its French operations.

The group also said its liquidity is strong and comfortably covers all its upcoming debt repayments beyond 2017.

Casino said it strictly applies international accounting standards and the group’s financial accounts are certified by its external auditors.

In addition, the company said most of its large subsidiaries are listed with additional scrutiny from their respective regulators and market authorities.

“Casino notes that the average target price derived from the consensus of 23 analysts covering Casino amounts to €55 per share as of December 18th, 2015,” it said.

In its report last Thursday, Muddy Waters said the basic problem with Casino was that its financial statements are “literally meaningless” to understanding the company’s poor health, as they do not distinguish between what Casino owns and what it owes.

“Casino’s financial statements greatly mislead investors about the value of Casino’s equity. Casino management then obfuscates and refuses to release key clarifying information, thereby continuing the misperception of value that is clear to insiders.

At 0930 GMT, Casino shares were down 0.4% to €43.82.