No takeover, but cooperation between Couche-Tard and Carrefour

Takeover talks between Carrefour and Couche-Tard have been halted. However, both companies are looking at how they can work more closely together in the future.

Food sovereignty

In a joint statement on Saturday evening, Carrefour and Couche-tard said they had stopped discussions about a possible takeover “in light of recent events.” By this they were no doubt referring to the intervention of French Economy Minister Bruno Le Maire, who called the French supermarket chain “an essential link in the food security and food sovereignty of the French” on television and was a staunch opponent of the takeover.

In 1999, the French government introduced a decree preventing non-European investors from controlling more than a quarter of the voting rights of French listed companies in certain sectors. These include companies involved in the “production, processing and distribution” of agricultural products, where these activities contribute to “national food security objectives”. The 25% threshold was lowered to 10% when the coronapandemic broke out, as the crisis would make some companies more vulnerable to foreign takeovers.

According to Barclays Capital, the French government was concerned about the possible impact of a takeover on jobs at Carrefour and its suppliers, including farmers. The French chain is France’s largest private employer with around 100,000 employees and the country’s second largest food distributor. Moreover, presidential elections are scheduled for next year.

Promises

In an ultimate attempt to win Carrefour, the management of Couche-Tard would have made many promises to the French government on Friday night. Among other things, the Canadians would invest three billion euros in the Carrefour stores in the next five years. The company also promised not to cut any jobs for at least two years and to keep the headquarters of the supermarket chain in France. But apparently it was not enough to convince the French government.

Carrefour and Couche-tard are now looking at how they can work more closely together in the future. Considerations include sharing best practices in fuel distribution, developing joint purchasing, partnerships in private brand development and marketing, sharing expertise and launching innovations to improve the customer experience, and optimising product distribution in regions where both groups operate.

Observers had their doubts about the rapprochement: they see little synergy potential and think there are more suitable partners to be found for Carrefour.