Canadian firm pulls out of Carrefour takeover after French ‘No’

Canadian convenience store chain Couche-Tard has dropped its multi-billion-euro takeover bid for French supermarket giant Carrefour, the two companies confirmed Saturday, after Paris said it would veto the deal.

Carrefour and Couche-Tard said they would pursue “operational partnerships” after the French government signalled it would not agree to the takeover because it could jeopardise food security — an even more important consideration given the coronavirus pandemic.

“Among the preliminary areas of cooperation to be explored are sharing best practices on fuel, pooling purchasing volumes, partnering on private labels, improving the customer journey through innovation, and evaluating ways of optimizing product distribution in the overlapping networks,” Carrefour and Couche-Tard said in a joint statement.

Couche-Tard, which operates internationally under Circle K and other brands, had on Wednesday submitted a non-binding offer for Carrefour, valuing the group at more than 16 billion euros ($19.5 billion).

But France’s Economy Minister Bruno Le Maire made his feelings clear on Friday, telling BFM and RMC television that his position was “a polite, but clear and definitive ‘No'”.

“Food security is a strategic consideration for our country and one does not just hand over one of the large French distributors like that,” he said.

“Carrefour is the biggest private sector employer in France with nearly 100,000 employees,” he added.

The group, which has more than 12,300 stores of various formats in more than 30 countries, accounts for 20 percent of the food distribution market in France.

– Canadian surprise –

Canadian officials were unconvinced by Le Maire’s argument.

A Canadian federal source said while they could understand concerns over allowing a foreign firm to take over such a large national employer, concerns over food security were unsubstantiated.

“We cannot accuse a leading Canadian company like Couche-Tard of endangering the food sovereignty of an entire country,” the source, who requested anonymity, told AFP.

Bloomberg reported that negotiations ended after a meeting between Le Maire and the founder of Couche-Tard, Alain Bouchard.

In an attempt to reassure ministers, Bouchard had promised to invest billions in Carrefour and to maintain employment for two years. The group was to be listed on the Paris Stock Exchange in parallel with Canada, according to Bloomberg. 

The French government’s reaction also caused surprise at Carrefour itself, according to sources who said Le Maire’s comments were “premature” given that merger discussions had barely begun.

Carrefour generated a net profit of 1.3 billion euros ($1.5 billion) in 2019 on revenue of 80.7 billion euros.

It employs 320,000 people worldwide.

Couche-Tard meanwhile has a network of more than 14,200 stores, in the United States and several European countries, as well as in Latin America and southeast Asia.

It earned a net profit of $2.4 billion on sales of $54 billion in its last complete year.

by Corentin DAUTREPPE