They rose more than 15% in the Paris stock market. The bidder said that it had submitted a non-binding proposal for the French group of 20 euros per share
European retail giant Carrefour received a surprise acquisition offer of € 16.2 billion ($ 19.72 billion) of Canadian convenience store operator Alimentation Couche-Tard, sending its shares soaring on Wednesday.
Couche-Tard said it had submitted a non-binding offer by the French group to 20 euros per share, mainly in cash, although he did not elaborate on his views of the combined companies.
Faced with increasing competition from online rivals like Amazon, European supermarket operators are seen as willing to strike deals, although Couche-Tard’s offering raised questions from analysts about the possibility of cost cuts or savings on purchases. .
Couche-Tard, which focuses primarily on gas stations in North America, would be entering virgin territory. Carrefour, the largest retailer in continental Europe, has operations in Europe and Brazil, including hypermarkets located on the outskirts of cities.
“Given the nature and location of the businesses (…) we see little room for synergies“said Citi analysts, adding that fierce competition makes France a particularly difficult market.
It is unclear whether Couche-Tard could try to choose between Carrefour’s operations.
Couche-Tard has made mostly smaller acquisitions in the past, though it was reported last year that he was a potential suitor for Marathon Petroleum Corp’s Speedway gas stations before another buyer closed a $ 21 billion deal.
There is no certainty at this stage that the discussions with Carrefour will lead to any agreement, Couche-Tard said.
Shares of Carrefour were up 15.3% to 17.83 euros, while those of Couche-Tard fell about 10% to 37.18 Canadian dollars. (1 dollar = 0.8216 euros).
Carrefour is one of the main chains in Argentina, although due to the collapse of consumption it is in a permanent process of adjustment. Weeks ago, the news was known that the businessman Francisco de Narváez had agreed to purchase all the premises of Walmart and Chango More.
In a recent report, Carrefour reported that the presence in Argentina is made up of 85 hypermarkets, 98 supermarkets and 401 “convenience stores” (Carrefour Express). Sales turnover reached $ 1.8 billion last year.
Canadian group Couche-Tard formally announced that it intends to merge with Carrefour
Negotiations with Couche-Tard
The conversations between Couche-Tard and Carrefour France they are in an early stage, the companies said Tuesday night in separate statements.
Carrefour shares rose more than 14 percent in in Paris on Wednesday, although its debt bonds plunged because investors fear that after the operation the debt of the new company arising from the merger will increase.
According to the prestigious Financial Times newspaper, if completed, the agreement would propel Couche-Tard towards Europe and Latin America, and would diversify its convenience store business by adding Carrefour’s portfolio of large format supermarkets in suburban areas, as well as smaller urban stores.
But analysts were quick to point out that there would be peight savings of costs with the combination since Couche-Tard operated in a very different retail market than Carrefour and had little geographic overlap. Ultimately, the lack of meaningful synergies would be at odds with the need. [por] that an appropriate control premium be paid to Carrefour shareholders, “wrote James Grzinic, an analyst at Jefferies, in a note.
There is also the risk that a foreign acquisition from one of France’s largest private employers with around 100,000 workers in its local market sparks a political backlash, especially at a time when the government has been massively intervening in the economy to mitigate the pain of the coronavirus. about companies and citizens.
Couche-Tard, which has a market value of $ 37 billion, has long grown through acquisitions and was among the bidders last year por Speedway, the American gas station group owned by Marathon Petroleum that was eventually acquired by its Japanese rival Seven & i Holdings for $ 21. bn.
In 2019, he looked to buy Caltex Australia in a $ 5.8 billion deal that would have seen the company entrench itself on a third continent, but Couche-Tard backed away last April when the coronavirus pandemic took hold of it.
Couche-Tard, based in Montreal, has a network of more than 9,200 convenience stores in North America through various brands, employing about 109,000 people. The group has a smaller presence in Europe, where it has fewer than 3,000 stores. It also owns gas stations, often located on site.
Carrefour is the largest supermarket chain in France with around 2,000 supermarkets and more than 700 large format hypermarkets in Europe; also has a presence in Brazil and Argentina. CEO Alexandre Bompard has launched a cost-cutting campaign in recent years, allowing him to make significant investments in the development of e-commerce, which has exploded during the pandemic.
Before the announcement, Carrefour had a market value of € 12.5 billion and a net debt of € 15.8 billion.
“If this deal were completed, it would be a true mega event in the world of food and convenience retailing,” said Clive Black, head of research at Shore Capital, on a note. “We will be interested in any prevailing investment thesis on justification and synergy.”