Circle K owner offers $ 20 billion to France’s largest retailer


Convenience store operators have a moment.

Canadian Couche-Tard, owner of Circle K, said in a statement Wednesday that he was offering € 20 ($ 24.35) per share to acquire France’s largest supermarket chain, Carrefour. The offer, which Couche-Tard expects to be primarily in cash, values ​​Carrefour at 16.2 billion euros ($ 19.7 billion) and represents a premium of 29% over its closing price of Tuesday.

It’s the last piece from a convenience store operator for a large supermarket group after Walmart offloaded Asda in October to the Issa brothers, who own gas stations and convenience stores in Europe and the UK.

Couche-Tard, which confirmed talks with Carrefour on Tuesday, said there was “no certainty” that the talks would lead to a deal. Carrefour said Wednesday in a statement that “the discussions are very preliminary”. Shares of the French company jumped 15% in Paris to nearly € 18 ($ 21.92).

The potential deal is already meeting resistance from the French government, leading to a 6% loss of the title early in Thursday. Finance Minister Bruno Le Maire said on France 5 television on Wednesday that he was opposed to a takeover of the country’s largest private employer.

“What is at stake is the food sovereignty of the French. So from this point of view, the idea that Carrefour could be bought by a foreign competitor, at first glance I am not in favor of this operation, ”he said, adding that the government has the power to block the transaction.

Couche-Tard is the largest operator of convenience stores in Canada, according to its website. It employs 109,000 people in North America, where it has more than 9,000 convenience stores, most of which are attached to gas stations.

The deal would significantly expand Couche-Tard’s presence in Europe, where it already has 2,700 outlets, including service stations, in countries such as Poland, Russia and Sweden. The two groups together are worth more than $ 50 billion.

Carrefour is the largest French retailer and the third largest grocery chain in Europe in terms of market share, behind Aldi and the owner of Lidl, according to Euromonitor. It has more than 10,000 convenience stores, supermarkets and hypermarkets across Europe. It is also present in Asia and South America.

The group performed well during the pandemic, posting its best sales performance for at least two decades in the third quarter, increasing online sales and opening more convenience stores.

Although the smaller format still accounts for less than 10% of sales, it is “very successful” with Carrefour customers, according to the company’s website, which says it wants to open 3,000 of these additional stores here. 2022 against 7,000 currently.

Home orders during the pandemic may have something to do with the growing popularity of convenience stores, which provide shoppers with easy access to essentials.

Analysts wondered about the merits of a possible merger between Couche-Tard and Carrefour. Clive Black, head of research at Shore Capital, said the rationale should be explained for “a case of this magnitude.” Carrefour has a market value of around 14.4 billion euros ($ 17.5 billion).

“Forecourt and convenience stores are exceptionally highly rated by the minute and use their balance sheets to diversify,” added Black.

If size matters in food retailing, the geography and format differences between the two groups would mean limited synergies resulting from a potential merger, according to Bank of America analysts Merrill Lynch Xavier Le Mené and Virginia Montorsi.

“We are not sure of the potential for value creation here, unless Couche-Tard were to offer a significant premium to Carrefour shareholders,” they wrote in a research note Wednesday. Carrefour shareholders include Groupe Arnault, an investment vehicle for LVMH chairman Bernard Arnault, which holds 5.1% of the company’s capital.

With a long history of acquisitions, Couche-Tard last year lost an offer to acquire Marathon Petroleum’s chain of Speedway gas stations, Black said. Marathon Petroleum sold Speedway to Japanese Seven & i Holdings, which owns 7-Eleven, for $ 21 billion in August.

– Sandrine Amiel contributed to the report.


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