Couche-Tard and Carrefour Abandon Takeover Talks

Canada’s Alimentation Couche-Tard Inc. and Carrefour SA broke off talks on a proposed $20 billion deal in the face of strong opposition from France’s finance minister to the tie-up, according to people familiar with the matter.

The decision to halt negotiations came after top executives of the Quebec-based convenience-store operator flew to Paris to offer the government several sweeteners: billions of euros of investment in Carrefour stores, no job cuts for at least two years and dual stock listings in France and Canada.

It was not enough to persuade Finance Minister Bruno Le Maire, who told executives in a private meeting Friday he was standing by his position that a takeover would be bad for France. Earlier, Le Maire said on BFM TV: “To sum up: it’s a no. A courteous no, but a no that is clear and definitive.”

Couche-Tard executives are flying back to Canada after the failed talks, the people said. While discussions are on ice for now, they could be revived later if the government changes its position, they said.

Couche-Tard and Carrefour Abandon Takeover Talks

A merger would have created a retail powerhouse, combining Couche-Tard’s North America-focused network of 14,200 convenience stores with Carrefour’s sizable European operations, which include hypermarkets and smaller outlets. Carrefour has more than 7,000 convenience stores and gets almost all of its revenue from Europe and Latin America.

Couche-Tard, Canada’s largest retailer by market value, faced hurdles from the outset for its offer of 20 euros per share. Le Maire signaled that even if both parties agreed to the transaction, regulators might still block it. Carrefour shares fell 2.9% to 16.61 euros in Paris on Friday. Couche-Tard rose 4.8% to C$37.98 in Toronto.

Representatives from Carrefour and Couche-Tard didn’t respond to requests for comment. The decision to stop negotiations was reported first by Reuters.

Political Implications

For French President Emmanuel Macron, the political stakes are high with local elections later this year and presidential ones in 2022. The campaign is already on, with his handling of the pandemic making him open to criticism. The loss of a well-known French company to a foreign takeover could fuel nationalist Marine Le Pen, his primary rival for leadership.

France has often objected to foreign attempts to take over its blue-chip companies -- frowning on talk of an approach from PepsiCo Inc. to yogurt maker Danone SA in 2005, for example.

The bid for Carrefour was especially sensitive because it is France’s largest private employer. On top of that, the pandemic has thrust jobs and the nation’s food supply to the top of the political agenda. “If this deal continues, food sovereignty comes before everything,” Le Maire said earlier this week, citing a decree he introduced in 2019 on state screening of foreign investments.

France isn’t the only country caught in a wave of protectionism that’s been heightened by companies’ suffering due to the coronavirus pandemic. The U.K. late last year drew up plans to give the government sweeping powers to intervene in foreign takeovers of assets deemed a threat to national security.

Some Couche-Tard analysts had questioned the deal’s strategic rationale and said it wouldn’t create significant cost savings as there’s little overlap between the two companies’ store networks. Both retailers’ bonds had slipped on concerns that the deal would swell the combined company’s debt burden.

The brutal ending marks another failed attempt by Couche-Tard to close a major takeover.

In April, the company cited the pandemic as a reason for walking away from a $5.6 billion proposal for gas station chain Caltex Australia Ltd. (now known as Ampol Ltd.), ending a six-month pursuit. Its largest acquisition to date is Texas-based CST Brands Inc., a rival chain it agreed to buy in 2016 for about $4 billion.

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