Walkers pass the Carrefour City supermarket, run by Carrefour SA, in Avignon, France, last Friday.
Photographer: Jeremy Suyker / Bloomberg
Photographer: Jeremy Suyker / Bloomberg
After a turbulent week that saw the French government shut down an attempt to take them over Carrefour SA, executives at Alimentation Couche-Tard Inc. lamenting the time of events, but not the movement.
“We are sorry for the surprise. We will not regret the project, ”said Chief Executive Brian Hannasch in an interview on Monday. “This was good for Couche-Tard shareholders. It was good for France. ”
The proposed $ 20 billion construction was still being negotiated when reported by Bloomberg on Tuesday. Three days later, Hannasch and Executive Chairman Alain Bouchard received a sharp rejection from French Finance Minister Bruno Le Maire.
Meanwhile, analysts and investors discussed the company’s sharp turnaround in a strategy toward entry into the supermarket industry. Couche-Tard shares fell about 13% between the initial report and Thursday’s closure, before kicking back on Friday as it emerged the deal would sink into the morality of French politics.
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Couche-Tard officials explained their approach during a call with analysts Monday, saying they scrutinized the target, visiting some 500 stores in the weeks before Christmas.
This combination would bring Quebec-based company Laval into the top ranks of global retailers, giving it the scale to quickly transform a landscape where consumers want different store formats and purchase options, the directors said.
To date Couche-Tard’s focus has been on convenience stores and gas stations with more than 14,000 locations across North America, Europe, Asia and Latin America. That could change even without Carrefour in his shopping cart.
“We’re more than just a small box retailer,” Hannasch said. “The world is changing and it’s going to bring competitors of the right scale, the right culture, and the right focus to win. ”
Read more: Couche-Tard to follow up on other offers after carrefour failure
Carrefour, which is famous for large out-of-town stores that sell everything from baguettes to T-shirts to grass-fed seeds, has halted its supermarkets while they invest in convenience stores, e-commerce and organic food under Chief Executive Alexandre Bompard.
Hannasch said Couche-Tard was supportive of Carrefour’s strategy, which also focuses on gaining a better understanding of the customer and getting the right price. “What we thought we could do was accelerate the operational focus on running the business well,” he said in an interview.
In the short term, Couche-Tard was also well placed to help Carrefour accelerate plans to add 3,000 convenience stores to a conventional network of more than 7,000, Hannasch said.
Geographical fit
Speaking to analysts, Hannasch visited the geographies of both companies. Couche-Tard has stores in Norway, Poland and other European countries but is absent from major markets in western Europe and South America where Carrefour operates, taking its toll. into France, Spain and Brazil.
Couche-Tard sign in Montreal.
Christinne Muschi / Bloomberg
As they now consider a richer alliance, Couche-Tard can learn from Carrefour’s experience in baking and ready meals, Hannasch said.
This difficult deal took a hard look at investors where Bouchard, one of Canada’s richest men, is considering taking Couche-Tard. In addition to groceries, the company has looked at dollar stores, fast-service restaurants and stores at train stations or airports, Hannasch said.
But food and fuel are the products the company aims for – and it has property in its DNA, he said.
Couche-Tard shares went up 1.6% in Toronto at 3:16 p.m., not enough for last week’s recovery. The fallout worried Bouchard, who reminded analysts of past deals that surprised investors as well, just to be successful. Carrefour fell 6.9% Monday, the highest since March, extending its decline for a third session.
Since 2011, pre-interest earnings, taxes, depreciation and depreciation have grown by an average of 22% a year, Hannasch said.
“Long-term shareholders stayed with us,” Bouchard said in an interview. “There may have been an emotional response from some portfolio managers there – and we didn’t deserve that.”