Because the acquisition of Carrefour by Couche-Tard is frozen (for the moment)
Carrefour and Couche-Tard have issued a joint declaration where the conclusion of the talks is not declared, as expected, but a series of operational partnerships are announced. All the details
Couche-Tard 's acquisition of Carrefour is currently frozen. Certainly not closed. The two companies have issued a joint declaration where the conclusion of the talks is not declared, as expected, but a series of operational partnerships are announced. A way like any other to buy time.
One thing is clear. Everyone knew very well, right from the start, that acquiring the most important employer in France that controls 20% of the food distribution market and one year before the presidential elections would not have been a walk in the park. An operation easy to exploit that would have been negatively experienced by the French despite the congruity of the Canadian offer.
But what actually happened?
Scrolling through the news in the French media and comparing it with what the bloggers with whom we often exchange information on the sector propose, everything seems to have started before last November. The Quebèc group, after sending visiting emissaries to the stores throughout the French territory, identified an excessive presence of large brands in the large-scale retail trade. Apart from Leclerc, Intermarché and Système U which have satisfactory results, attention has been focused on the three brands in greatest difficulty: Carrefour, Auchan, Casino. The first two struggling with major restructuring plans, the third for its debts. Carrefour was the natural choice also because its two main shareholders have long wanted to sell their shares.
A contact towards the end of the year with the CEO Alexandre Bompard and a formal letter of interest kicked off the operation. A few days later Alain Bouchard, President and CEO of Couche-Tard met the management of Carrefour.
In the introduction, it should be emphasized that oil represents about 70% of turnover and 40% of the margins of the Canadian company which therefore knows well that his is a business that risks turning into a handicap in the not too distant future, even for the 'advance of the electric. This is why it tries to anticipate the necessary changes and to evolve its business model.
Carrefour meets all expectations: they are strong in Europe where there is no Couche-Tard, they are strong in food and, above all, they are on sale. At that point, they prepare an appropriate offer but, as always happens in these cases, in the most delicate phase, someone who has an interest in making the operation fail, spreads the news and jumps the confidentiality of the negotiation. The minister is furious because he finds out from the media and the reparation phone call from the CEO of Carrefour is of little use.
So even the Canadians realize that their operation is in the public domain and is in danger of skipping. Bruno Le Maire, irritated by what he interprets as an unfairness towards him, takes it out on the main shareholders of Carrefour. Bernard Arnault and Philippe Houzé, whose family owns 12% of the shares and who just recently requested and obtained a 300 million euro state-guaranteed loan to withstand the crisis. Hence the harsh statement on TV of clear closure on the operation by the minister: "To summarize my position expressed to the Canadians: it is a polite no, but a clear and definitive no."
The peer of Quebèc Pierre Fitzgibbon tried to explain to his colleague the close ties between the French-speaking province and France and the recent agreements that have allowed acquisitions in Canada by French companies. No way. At that point it was better for everyone to sketch.
The CEO of Couche-Tard himself, however, left the door open by declaring that "if we receive different signals from the French government or other key players, we would like to have the opportunity to commit ourselves again, even under the right conditions". Same attitude from the top of Carrefour "We must continue to advance beyond radar range" and lay the foundations for what could become topical after the presidential elections. It is clear that it is in everyone's interest to break the deadlock and quickly move on.
For Carrefour it is a cold shower. Someone in the entourage would have hissed through gritted teeth "It is incredible that a minister of the economy will reject an operation without even having studied it." Sources close to the top of the group have leaked that in addition to the huge investments put on the table, the employment guarantees for a period of two years, Couche-Tard would have accepted that Carrefour would keep its headquarters in Paris and that the new group probably called "Couche- Tard-Carrefour ”, was also listed on the Paris Stock Exchange. And, last but not least, the Canadians had declared their readiness to leave Alexandre Bompard at the helm of the Group even though supported by Brian Hannasch.
So far the facts. However, an interesting duel continues on social media between the CEO of the group Alexandre Bompard and the Minister of Economy of the French Government Bruno Le Maire. The occasion was offered by a recent Carrefour promotion on ultra discounted maple syrup also launched on social networks. A typical Canadian product widespread in Quebec and part of the popular culture of that country. "For those who get up early (lève-tôt) but also for those who go to bed late (couche-tard) can find it in our stores open 24 hours a day … Alexandre Bompard immediately relaunched it with a tweet " I never relaunch our promotions, but this… ”ironically underlining the pun. Bruno Le Maire immediately replied with an animated Gif where you can see French crêpes on which Canadian maple syrup slips away. Pinpricks that signal the respective discomfort.
Je ne relaie jamais nos promotions mais there…. https://t.co/o7xjd9jy5Q
– Alexandre Bompard (@bompard) January 20, 2021
On the one hand the management of Carrefour and its main shareholders who are still betting on the operation, on the other a government just over a year before the presidential elections. According to Marc Guyot and Radu Vranceanu "this straight -legged intervention by the government in a shareholder restructuring operation is steeped in populism and cynicism and risks only damaging all Carrefour collaborators".
Beyond the Twitter jokes is the risk of a dangerous standoff. On the one hand, the need for a company to investigate an important opportunity for its future with the risk that the possible buyer will put aside his project and go elsewhere and, on the other, the needs of the policy that prefers to get in the way so as not to decide. nothing under elections. The nervousness is evident and the tweets, while witty, do not remove it.
Couche-Tard is a healthy company that wants to invest in Europe in an important reality without creating dangerous overlaps. An excellent choice for Carrefour, for its collaborators and for its future inside and outside the French borders. However, these operations work if they open and close in a reasonable time.
The French presidential elections are not a formality with a foregone conclusion. Carrefour could also find itself at the mercy of unpredictable results on a political level in the midst of the crisis of large-scale distribution between the economic and social consequences of the pandemic and the need to have the necessary resources to compete. Faced with complex scenarios that also involve other large French brands in difficulty, vetoes, appetites, ideas of joint projects and consortiums could be triggered by which the shareholders of Carrefour and its management do not think they would like to be involved.
Article taken from Mario Sassi's blog, here the full version.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/perche-lacquisizione-di-carrefour-da-parte-di-couche-tard-e-congelata-per-il-momento/ on Sat, 23 Jan 2021 14:47:12 +0000.