French Labor Minister says no

Carrefour store. Photo: Teodororoianu/Dreamstime
Talks between Canadian Alimentation Couche-Tard and French Carrefour about the former taking over the latter is over after clear messages against a deal from French government officials due to food sovereignty and job security. Meanwhile, Carrefour is bigger abroad than in France. The image is of a Carrefour store in Romania. Photo: Teodororoianu/Dreamstime
By Reidar Molthe

21 January 2021 09:07

French Labor Minister says no

Labor Minister Elisabeth Borne gives a clear message that she is against a takeover of French retailer Carrefour by Canadian convenience-store operator Alimentation Couche-Tard.

That means the talks are over. Neither Alimentation Couche-Tard nor Carrefour is interested in continuing talks on mergers or acquisitions when opposition is so obvious among French political elite.

Alimentation Couche-Tard’s near $ 20 billion takeover approach for Carrefour - continental Europe’s largest retailer - ran into early opposition last week with the French government raising concerns about food sovereignty and job security at one of the country’s largest employers. French protectionism is nothing new but does not get better for that reason.

French protectionism nothing new

An army marches on its stomach, Napoleon said in 1814. 200 years later the French government is using a similar argument to protect its largest grocer Carrefour from a possible takeover by Canada’s Alimentation Couche-Tard. Yet while concerns over jobs and supply chains have been given new prominence by the pandemic, a foreign owner is an unlikely threat, either to employees or to food security.

In 2005 the government vowed to protect “the interests of France” when American soft drink giant PepsiCo was sniffing around dairy group Danone. Finance Minister Bruno Le Maire echoes that sentiment when he says jobs and food sovereignty are key concerns in the possible takeover of Carrefour by the Canadian retail giant. 

Unlike a manufacturer, the Canadian group could hardly move thousands of shops abroad. Indeed, supermarkets have hired more staff to keep shelves stocked during the pandemic. A change of ownership will probably make little difference.

Carrefour bigger abroad than in France

Concerns about domestic ownership is also at odds with Carrefour’s global footprint. France accounted for less than half of Carrefour’s 81 billion euros of revenue in 2019; the company is the largest cash and carry operator in Brazil.

An upcoming election and the pressure of the pandemic mean it is right to worry about food supplies, but stopping investors buying shares in a retailer is hardly the answer.

And what about Carrefour's recent acquisitions of 172 Supersol stores in Spain? What would the French authorities say if the Spanish authorities stopped such an acquisition with arguments about food security? The answer is self-explanatory.

Focus on other deals

Executives at Alimentation Couche-Tard say they would still like to buy the French grocer someday but will turn their focus to other potential deals.

In response to criticism of the deal, Couche-Tard executive chairman Alain Bouchard said previous large acquisition - including the 2003 acquisition of Circle K - also surprised the market, but they worked out.

“Over the last decades while growing our business we have made many bold moves, some of which were not always obvious to our stakeholders,” Bouchard said on a conference call with investors Monday this week.

"Was I hoping our bold approach to Carrefour would have turned out differently? Of course. Yet I am tremendously proud that Couche-Tard had the financial strength and insight to make such an offer."

Sources: Bloomberg, Reuters, Carrefour, Couche-Tard.

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