Paris: Canada’s Alimentation Couche-Tard Inc. and France’s Carrefour SA abandoned talks on a proposed $20 billion merger following stiff opposition from the French finance minister, and will look instead at forming a looser alliance.
The companies will now consider how to work together on fuel purchases, branding and distribution where their networks overlap, the companies said in a joint statement Saturday.
“The opportunity for operational partnerships with Carrefour will further our journey towards becoming a leading global retailer,” said Brian Hannasch, president and chief executive officer of Couche-Tard.
A merger would have created a retail powerhouse, combining Couche-Tard’s North America-focused network of 14,200 convenience stores with Carrefour’s sizable European operations, which include hypermarkets and smaller outlets. It could also have ranked as one of the biggest-ever takeovers of a French company by a foreign entity.
The decision to stop the merger negotiations comes after top executives of the Quebec-based company flew to Paris to offer the government several sweeteners, including billions of euros of investment in Carrefour stores, no job cuts for at least two years and dual stock listings in France and Canada.
Politics in business
They failed to persuade Finance Minister Bruno Le Maire, who told executives in a private meeting Friday he was standing by his position that a takeover would be bad for France. Earlier that day, Le Maire said on BFM TV: “To sum up: it’s a no. A courteous no, but a no that is clear and definitive.”
Government officials in Canada tried to press the case. Quebec Economy Minister Pierre Fitzgibbon emphasized the close links between the French-speaking province and France, including deals that have gone the other way. Last year, Alstom SA agreed to buy the rail unit of Bombardier Inc., and Airbus SE is the majority owner – in partnership with the Quebec government – of a commercial jet program that was originally developed by Bombardier.
Couche-Tard “could be a very strategic shareholder that would benefit Carrefour’s operations in France,” Fitzgibbon said to reporters Friday.
Couche-Tard – the name means “night owl” in French – is Canada’s largest retailer by market value and has built a global empire through acquisitions over four decades. But it faced hurdles from the outset in France for its offer of 20 euros per share.
Carrefour employs about 100,000 people in France and is the country’s largest private employer, making a takeover politically sensitive. French President Emmanuel Macron, facing an election in 2022, is facing criticism for his handling of the pandemic. The loss of a well-known French company in a foreign takeover could fuel nationalist Marine Le Pen, his primary rival for leadership.
Le Maire had cited concerns about a French supermarket chain falling into foreign hands, saying the country needs to maintain domestic control over its food supply. The Covid-19 crisis has added impetus to that argument, and France recently bulked up its authority to block foreign takeovers.
Carrefour shares fell 2.9 per cent to 16.61 euros in Paris on Friday. Couche-Tard rose 4.8 per cent to C$37.98 in Toronto – shares in the Canadian company slumped after Bloomberg first reported the talks on Jan. 13, reflecting investor concern that a deal would inflate the combined entity’s debt burden.