Groupe Partouche SA History

Address:

141 bis, rue de Saussure
75017 Paris
France

Telephone: (33) 1-47-64-33-45
Fax: (33) 1-47-64-19-20

Website: www.partouche.fr

Public Company
Incorporated: 1973
Employees: 3,341
Sales: EUR 258.8 million ($214 million)
Stock Exchanges: Euronext Paris
Ticker Symbol: PAR
NAIC: 713210 Casinos (Except Casino Hotels)

Company Perspectives:

The future will involve the creation of major establishments, such as Le Pharaon in Lyon or the future Aix-en-Provence Pasino, which will be born with the new century. It will also involve continuous and general improvements to our casinos in order to meet, in the spirit of the Partouche Group, the expectations of our clients and friends. Our efforts abroad will be directed towards defending and illustrating our philosophy. Our way is the right one, even if it is not the easiest. We shall not deviate from it.

Key Dates:

1973:: Isidore Partouche purchases thermal spa, mineral water, and casino complex at Saint-Amand-les-Eaux.
1976:: The company buys a second casino at Touquet.
1982:: Partouche acquires a casino at Forges-les-Eaux and opens a new casino at Boulogne sur Mer.
1989:: Company begins selling off its bottled water operations.
1991:: Partouche is granted a concession to install slot machines in its casinos.
1995:: Groupe Partouche goes public on the Paris secondary market and opens its first foreign casino in Belgium.
1996:: The company opens a casino in Morocco in partnership with Club Med.
1999:: Partouche acquires 50 percent of Société Française de Casinos (SFC), which operates four casinos.
2000:: The company takes a majority shareholding in SFC.

Company History:

Groupe Partouche SA is gambling on keeping its number one position in France's casino industry. The Paris-based group owns and operates 30 casinos, including 25 in France and five abroad. Casino operations make up some 80 percent of the company's turnover of nearly EUR 260 million in 2000--and slot machines account for nearly 90 percent of its casino revenues. Partouche also operates a number of restaurants, most of which serve the company's casinos in keeping with strict French regulations governing casino operations. The company's operations are focused on France, Belgium, and North Africa. Partouche also operates a number of hotels, including thermal and other spa resorts. The company, founded by Isidore Partouche, continues to be dominated by the Partouche family, despite its listing on the Euronext Paris stock exchange. Indeed, the Partouche family owns more than two-thirds of the company's stock and holds nearly all key positions in the company, including direct management of most of its casinos. Hubert Benhamou, nephew of Isidore Partouche, functions as chairman of the group, while Partouche's son, Patrick, is the company's managing director. Partouche himself, as head of the company's supervisory board, maintains a say in the company's development. This includes its "Pasino" concept, grouping under one complex a casino, shopping mall, a number of themed restaurants, a theater, and other amenities. In 2001, the company launched a Pasino in Aix-en-Provence, adding to a Pasino opened in Djerba, Tunisia. At the beginning of 2002, Partouche launched what many saw as a salvo in a coming takeover battle against aggressively growing Accor for control of rival Compagnie Européenne de Casinos. If successful, Accor's acquisition will place Partouche in second place in the French market.

A Start in the 1970s

Isidore Partouche and family were members of the "Pied Noir" community of French citizens living in Algeria that were forced to repatriate to France after Algeria's declaration of independence at the beginning of the 1960s. Partouche had previously worked for Philips in Algeria. In 1965, Partouche decided to enter the French leisure market, operating go-cart tracks at first, then night clubs. In 1973, however, Partouche, with the financial support of his family, bought a failing spa resort and mineral water source, Saint-Amand-les-Eaux. The purchase also gave Partouche the spa's failing casino. Partouche soon returned the casino to profitability, yet his primary interest for the time being was in building up his interests in the bottling and distribution of mineral water. This was in part because of the strict French government regulations that hampered the growth of the casino industry in the country.

Gambling remained outlawed in France until the beginning of the 20th century. Legislation adopted in 1907 allowed casino gambling in the country, but only in the country's spa resorts and ocean side beach communities, with further legislation prohibiting the opening of casinos less than 100 kilometers from Paris. A number of other restrictions were placed on the profession, such as an insistence that casinos remain open only on a seasonal basis, with the year ending in October, and that casinos provide restaurants and entertainment. Casinos were also required to charge an entrance fee to its customers. An important limitation on French casinos was a ban on slot machines, which had been particularly responsible for the success of Las Vegas. Instead, France's casinos were limited to just a handful of games, including Baccarat, Blackjack, and Roulette. An immediate result of these restrictions was that France's casinos became strongly associated as playgrounds for the world's wealthy, as exemplified in several of the James Bond series of films. Yet by the 1970s, France's casino industry remained a relatively small and fading sector dominated by the Groupe Barrière.

Partouche continued to develop his interests in mineral water, building up a portfolio of labels that included Amanda, Arline à Francoville, Eau d'Alet-les-Bains, Source Luceux, as well as a Belgian brand, Source Baudour. Expanding and supporting the company's bottling and distribution operations took up most of the company's finances and expansion of its casino holdings, hampered by legislation, remained on the backburner. Nonetheless, Partouche continued to pick up new casinos during the 1970s and 1980s.

In 1976, Partouche bought the Le Touquet's casino from the Barrière family, creating the subsidiary SA Le Touquet's. That subsidiary went on to build a new casino, in Calais, in 1982. In 1986, the company took over a casino of Forges-les-Eaux, which, at 110 kilometers from Paris, lay just outside the capital city's restricted zone. That same year, the company opened a new casino at Boulogne sur Mer. Two years later, Partouche added to his growing casino holdings with the purchase of a casino in Dieppe.

Joining Partouche in the business were members of his family, including son Patrick and nephew Hubert Benhamoun, who were later to take over the day-to-day operations of the company. By placing family members in charge of his company's casinos, and allowing them a good deal of discretion over their individual businesses, Partouche nonetheless retained tight control of the company's gambling operations. Yet the casino market during the 1980s was increasingly facing difficulties, with many of the country's primarily small operators facing financial ruin.

Leadership Slot in the 21st Century

The French government promised changes in the legislation governing casino gambling in 1988 in order to shore up the struggling sector. Among the announced changes was the government's intention to legalize the placement of slot machines, although these were still to be separated from the classic gaming tables, where an entry fee continued to be required. The admittance of slot machines was expected to revolutionize the industry, attracting a far broader and different clientele from the industry's hitherto upscale players. Another component of the new legislation was also to enable casino operators to attract new markets, as casinos were now permitted for the first time to open in towns with populations of more than 500,000.

Isidore Partouche immediately recognized the potential of the proposed new legislation, and determined to lead the company into a new, more focused direction as a casino operator. In 1989, Partouche adopted a new strategic direction and began winding up its water bottling and distribution business. Proceeds from the sale of those operations were then used to begin buying up casinos around France, beginning with the acquisitions of casinos in Fécamp, Bagnoles-de-l'Orne, and Vichy. At the time, Partouche established a pattern of buying up smaller and more financially fragile competitors, building up a fast-growing empire that was to overtake long-time market leaders Groupe Barrière before the end of the decade.

By 1991, however, the government still had not delivered on its promise to enact the new casino industry rules. The legislation finally came that year, but only after Partouche threatened to take legal action against the government. Armed with its permits to install slot machines at its casinos, the company stepped up its expansion program. By the end of 1991, the company had acquired the Lyon-Vert casino, located at la Tour-de-Salvagny, as well as two subsidiary casinos located in Saint-Galmier and Juan-des-Pins. The following year, the company acquired the concession for the then-shuttered casino at Royat.

The company began eyeing entry into one of the larger urban markets authorized by the new casino legislation. In order to build capital for an investment--with Lyon as the company's primary target--Partouche sold off two of its earlier casino acquisitions, Fécamp and Bagnoles-de-l'Orne. The company once again turned acquisitive. In 1994, Partouche added a casino at Aix-en-Provence, which gave it access to the Marseilles market nearby. By the end of the year, the company had added two more casinos, at La Ciotat and Palavas. The following year, Partouche bought up a 50 percent share in a casino in Grasse with partner Group Boucau.

In 1995, Partouche decided to step up its expansion ambitions, and especially with an eye on expanding its holdings internationally. That year, the company took a listing on the Paris stock exchange's secondary board. By the end of 1995, the company had made its first international acquisition, of the casino at Belgium's resort town Knokke Le Zoute.

Partouche had gained quickly on rival Groupe Barrière. In 1996, the company moved in on its rival's territory, buying up a minority stake in Société Fermiere du Casino Municipale de Cannes, a subsidiary of Barriere which operated casinos and a hotel in that famed city. Yet Partouche's attempt to gain control of that money-losing operation was blocked by the Barrière family.

Partouche could be consoled in the knowledge that by then his company was well on its way toward becoming France's leading casino operator. The company continued to expand in 1996, opening a casino in Agadir, Morocco, in partnership with Club Méditerrané. In 1997, Partouche added a new dimension to the company's operations when it acquired a four-star hotel, part of the complex housing its Juan-les-Pins casino, which was subsequently renamed Le Méridien-Garden Beach. That year, the company also was granted a concession to open a casino in the city of Lyon.

The company made a new move internationally when it opened a casino in Djerba, Tunisia, in 1998. Dubbed a "Pasino," the complex combined a casino with other operations that included a shopping mall, themed restaurants, and a theater. The complex was to prove a money-loser, in part because Tunisian law prohibits Tunisians themselves from gambling, but remained among Partouche's favorites, in part because it represented his return of sorts to his North African roots.

Partouche joined the Parisian main board in 1998. The company then continued its quest to establish itself in the Cannes market. In that year, the company acquired the Carlton Casino Club from London Clubs International. Later that same year, Partouche acquired a 99 percent stake, from Groupe Vivendi, in the company Cannes Balnéaires, which owned the closed Palm Beach casino in Cannes. Partouche began preparing to reopen the Palm Beach, spending some FFr 50 million on its renovation. That structure opened again in 1999.

Partouche stepped up its expansion at the turn of the century. The company opened a new casino at San Roque, in Andalousia near Gibraltar, in July 1999. In November 1999, the company took a 50 percent share of Société Française de Casinos (SFC), which held three casino properties at La Barboule, Mont-Dore and Gruissan in Auxerre, and a fourth casino on the Narbonne coast. At the same time, the company opened, in partnership with Hilton, a casino at the company's Hotel Athénée Palace in Bucarest. That endeavor proved unsatisfactory for Partouche, which sold the Bucarest casino at the end of 2001.

The company increased its position in SFC to majority ownership in October 2000. By then the company had opened its casino in Lyon, the first large French city to authorize casino gambling. That casino opened as part of the Hilton hotel complex at La Cité Internationale. The company continued to make acquisitions in 2000, picking up a casino at Châtel-Guyon and a floating casino, the Lydia, moored at Port Barcarès, on the beach near Perpignan.

In December 2000, the company acquired the Hotel Parabella in Aix-en-Provence, then purchased an adjoining spa, and began preparing a conversion of the complex to the newest, and largest, "Pasino," which opened its doors in July 2001. Meanwhile, Partouche began looking beyond casinos as it began diversifying its operations for the new century. In November 2001, the company bought the Hotel Savoy in Cannes, located close by the company's Carlton Casino in that city. Partouche also acquired and renovated a restaurant in the northern city Le Havre, which reopened in 2001 as La Villa. In December 2001, the company bought up the thermal spas at Contrexeville and Vittel, a purchase which also gave it control of a casino at Contrexeville.

These diversification moves nonetheless complemented the company's existing casino operations, allowing the company to expand the range of services it was able to offer its clientele. Over the past decade, Partouche had been one of the leaders in the consolidation of the French casino gambling sector--by the end of 2001, Partouche claimed 19 percent of the French market, ahead of both Group Barrière and Accor.

Yet in December 2001, Accor, already one of the world's leading hotel groups, stepped up its expansion into France's casino market when it announced an offer to acquire Compagnie Européenne de Casinos (CEC), a move that would make Accor undisputed leader in the French market (and one of the top casino groups in all of Europe). Yet Partouche struck back, acquiring nearly seven percent of CEC for a significantly higher share price, a move that for many observers signaled the start of a takeover battle. With its strong record of growth, Partouche was unlikely to let go of its leadership position without a good fight.

Principal Subsidiaries: Sa Casino De Saint Amand; Sa Grand Casino De Cabourg; Sa Casino Du Grand Café; Sa Grand Casino De Beaulieu; Sa Forges Thermal; Sa Casino & Bains De Mer De Dieppe; Sa Jean Metz; Sa Le Touquet's; Sa Casinos Du Touquet; Sa Casinos De Vichy; Sa Numa; Sa Eck (Belgium); Sa Casino Le Mirage (Morocco); Sa Le Grand Casino De Djerba (Tunisia); Casino Nuevo De San Roque (Spain); Groupe Partouche Romania (Romania); Sa Sathel; Sa Casino Municipal De Royat; Sa Casino Le Lion Blanc; Sa Eden Beach Casino; Sa Casino Municipal D'aix Thermal; Sa Casino Des Flots Bleus; Sa Casino De Palavas; Sa Casino De Grasse; Sa Grand Casino De Lyon; Sa Lcl France & Cie (Casino Carlton); Sa Phoebus Casino Gruissan; Sa Casino Mondore; Sa Casino Bourboule; Sa Casino Chatel Guyon; Sa Elysee Palace Hotel; Sa Hotel International De Lyon; Snc Garden Beach Hotel; Snc Egh-La Part Dieu; Snc Hotel Du Golf; Sarl Aquabella; Hotel Casino Phoebus; Splendid Hotel; Sa Cannes Balneaires (Palm Beach); Sa C.H.M.; Sarl Societe Immobiliere De La Tour; Sa Baratem; Sa Holding Garden Pinede; Sci Hotel Garden Pinede; Sci Rue Royale; Elysée Palace Expansion; Elysée Palace Sa; Sa Groupe Partouche Belgique (Belgium); Sa Sikb (Belgium); Sprl Caskno (Belgium); Sprl Artmusic (Belgium); Sarl Sek; Sci De L'eden Beach Casino; Sci Palavas Investissement; Sc Du Casino De Grasse; Sa Lydia; Sci Lydia Investissement; Sci Les Thermes; Sarl Therm'park; Port La Nouvelle; Sa Gcjb; Sarl Sed; Sarl Sf2d; Sa Sfc; Sarl Sihct; Sci Montdore; Sci Phoebus; Sci Azt; Sa Semcg; Sci Fonciere Grands Hotels; Cie Thermale; Café Carmen.

Principal Operating Units: Casinos; Hotels; Spas.

Principal Competitors: Groupe Barrière SA; Accor Casinos; Société des Bains de Mer et du Cercle des Étrangers à Monaco; Compagnie Européenne de Casinos; Groupe Tranchant; Groupe Moliflor; Groupe Emeraude SA; Hôtels et Casino de Deauville SA.

Groupe Partouche SA History

Company Perspectives:

Key Dates:

Company History:

Further Reading: