Industry
France on Thursday took a tough line against the takeover of foreign-owned retailer Carrefour, dealing a major blow to a nearly US $ 20 billion bidding process with Couche-Tard in Canada.
Buyers with a face mask leave the Carrefour supermarket in Paris, France, 14 January 2021. REUTERS / Benoit Tessier
PARIS: France on Thursday took a hard line against foreign-owned dealership Carrefour, dealing a major blow to a nearly US $ 20 billion bid method with Couche-Tard in Canada.
French Finance Minister Bruno Le Maire told Reuters that the government wanted to preserve the country’s food security and sovereignty.
“Buying Carrefour with a foreign company would be a big problem for us all,” Le Maire said in an interview at a Reuters Next conference.
“Food security is at the heart of the strategic challenge of all developed nations,” he said.
Along with other vendors, Carrefour, with around a fifth of the French grocery market, played a major role in ensuring a smooth food supply as a pandemic hit with COVID-19.
But utility company Alimentation Couche-Tard’s offer for Carrefour – Europe’s largest retailer – is raising other political views as well, as the group is one of France’s largest employers.
Shares fell in Carrefour on Thursday when the French government opposed a deal, with Labor Minister Elisabeth Borne also saying she was against it.
Shares fell 1.7per percent at 1429 GMT after jumping 17per percent on Wednesday.
Morningstar analyst Ioannis Pontikis said the market seemed to be priced in a low likelihood that the deal would go through.
The Couche-Tard approach also caught the eye of analysts partly because they did not see much potential for cost savings – the group, which focuses on gas stations, has little different link in North America by Carrefour.
But this could be a benefit in terms of retaining jobs, and a takeover could be of interest to Carrefour if it provided firepower for investments in areas such as e-commerce. .
Traditional retailers including Carrefour are trying to restart to fight rising competition from the likes of Amazon.
A source close to Carrefour said the group was surprised by Le Maire’s immediate opposition to the deal.
“We are surprised by this reaction as we are at a very early stage,” the source told Reuters.
Another source familiar with the matter said it was too early to say the agreement would not go through.
The French government spoke out in 2005 to defend the large French industry amid rumors that Danone could take over an offer from PepsiCo Inc.
The country has since tightened takeover rules to protect strategically regarded French companies, including under the leadership of Emmanuel Macron, which will oppose the 2022 presidential election.
Through the pandemic, Macron has put up ramps to defend French sovereignty in areas such as healthcare and business, although the former investment banker has tried to strike a balance with a friendly approach your business.
Couche-Tard on Wednesday made a non-binding offer of 20 euros per share for the French grocery group, mostly in cash.
A source familiar with the talks told Reuters that 20 euros per share was just enough as a starting point for talks. The first communication between the two companies came at the end of last year and Couche-Tard sent its first letter in early January, the source said.
In a statement Wednesday, Carrefour acknowledged Couche-Tard’s approach to debating mixing.
(Reporting by Leigh Thomas, Dominique Vidalon, Gwenaelle Barzic, Matthieu Protard, Sarah White and Keith Weir; edited by John Stonestreet and Jane Merriman)