Politics is collapsing in Paris with 20 billion dollars

Photographer: Jeremy Suyker / Bloomberg

Alain Bouchard, founder of Alimentation Couche-Tard Inc., hopes to save $ 20 billion offer Carrefour SA, when it arrived at the French Ministry of Finance, whose headquarters leaves over the Seine like a folded aircraft carrier in the east of Paris.

After being held to wait for a brief hearing with Finance Minister Bruno Le Maire, Bouchard received the message: The proposed agreement was dead on arrival, torpedoed by the French political opposition.

Friday’s meeting ended a tumultuous week for Couche-Tard and Carrefour. Bouchard, a self-employed billionaire who had turned an obscure Canadian gas station operator into a 14,200-point-of-purchase retail empire, wanted to take the next step. The purchase of the French grocery store would have turned Couche-Tard into a global retail giant, along with Walmart Inc.

However, the overture it ended just four days after it came out, and companies said they would look for a weaker alliance, sending Carrefour shares up 7.6% lower on Monday. The transfer of one of France’s largest supermarket owners to foreign ownership was impossible at a time when the Covid-19 blockades underscored the strategic importance of the country’s food supply, Le Maire said.

Couche-Tard is not the first foreign acquirer to have been hampered by French concerns about economic sovereignty, but he underestimated the flag-waving reflexes that sharpened in the middle of Covid-19. Given the regional elections later this year and the presidential vote set for 2022 to allow the country’s largest private employer to fall into foreign hands, it could have given nationalist leader Marine Le Pen and leftist Jean-Luc Melenchon a chance. new famous cause to attack centrist President Emmanuel Macron.

Bad timing

“It was not the time to do such a business,” said Fabienne Caron, an analyst at Kepler Cheuvreux. “The government had much more to lose than to gain. The real reason is politics. “

The companies aggravated their miscalculation by making them Le Maire and Macron. The finance minister learned of the talks late Tuesday in a message written by Carrefour chief executive Alexandre Bompard, according to a Finance Ministry official who asked not to be named, citing government rules. Bloomberg News appeared at the time the report revealed the talks that evening.

Read more: Couche-Tard faces grilled investors as Carrefour transaction fails

This article is based on interviews with people familiar with the government’s discussions and position, who asked not to be identified due to the sensitivity of the issue. Carrefour and Couche-Tard declined to comment.

Talks between the two companies began in the fall, after Couche-Tard failed to buy Marathon Petroleum Corp.’s Speedway gas station network Previous acquisitions have built Couche-Tard from a single store in a Montreal suburb into a convention point operator that stretches from Texas to Hong Kong.

Carrefour, best known for its giant out-of-town stores that sell everything from baguettes to T-shirts and grass seeds, has been driven by rising online shopping and rising Lidl and Aldi. Under Bompard, it downgraded its hypermarkets while investing in convenience stores, e-commerce and organic food, but shares had fallen more than a third from its 3 1/2-year term before Tuesday’s news.

Friendly discussions

Later that evening after the leaks, both companies confirmed the talks, stressing that the negotiations were friendly. The next day, Carrefour’s shares rose, with Couche-Tard confirming that it weighs 20 euros per share.

However, in government neighborhoods, opposition has grown. On Wednesday afternoon, Le Maire spoke with Bompard, as well as key Carrefour investors such as LVMH President Bernard Arnault, who holds a 5.5% stake. At the end of the day, the finance minister went on TV to say he opposes the agreement.

A representative for Arnault did not respond to a request for comment.

Carrefour advisers and some analysts saw a position in Le Maire’s hard line, believing that the finance minister would eventually give. They had reason to believe that this agreement could be seen differently from the 2005 approach by PepsiCo Inc. to the French yogurt maker Danone SA, which was blocked for reasons of sovereignty.

After all, Macron is a former Rothschild banker who took office four years ago with the promise of shaking a French economy hampered by state interventionism. Couche-Tard comes from Quebec, which has close linguistic, cultural and business ties. And Carrefour could use a partner with deep pockets to finance its incomplete change.

In 2019, France led European countries in a ranking of foreign investment projects by the accounting firm EY. Its companies have also stepped up overseas expansion, with LVMH recently completing the $ 16 billion acquisition of Tiffany & Co. dosing problem during testing.

Couche-Tard was ready to respond to French concerns with commitments to pump 3 billion euros ($ 3.6 billion) into Carrefour, while guaranteeing jobs and committing to maintaining the retailer’s headquarters in France, as well as listing the shares of combined companies in both countries.

“Major difficulty”

Le Maire appeared to open the door at a conference on Thursday, when he described Carrefour being acquired by a foreign entity as a “major difficulty”. Until Friday morning, he tried to clarify any ambiguity, stating in a morning TV appearance that his position on the Couche-Tard approach was “not clear and definitive.”