Carrefour shares soar on merger talks with Canada's Couche-Tard
Both firms say discussions at early stage
Shares in French grocery giant Carrefour soared on Wednesday after news that Canada’s Alimentation Couche-Tard had made a friendly approach on a potential merger.
Quebec-based Couche-Tard, which owns the Circle K chain, overnight said it has started “exploratory discussions”. The company does not have a presence in the supermarket sector.
Carrefour confirmed the approach, adding that “discussions are very preliminary”. Shares in France’s biggest private employer gained more than 13% on the news on Wednesday.
Couche-Tard’s main operations are focused on convenience stores and petrol stations, running a network of more than 9,000 shops in North America, employing 109,000 people, according to its website.
It also operates a 2,700-store retail network across Scandinavia, Ireland, Poland, the Baltics and Russia, the majority of which offer fuel and convenience products while the others are unmanned automated petrol stations.
Couche-Tard tried tried to buy Caltex Australia Ltd. before deciding against a revised offer during the pandemic. In 2016 it agreed to buy US gas-station operator CST Brands for around $4bn, and moved into Scandinavia and the Baltic region through its 2012 purchase of Statoil Fuel & Retail ASA.
Carrefour operates more than 2,800 supermarkets and 703 larger-format hypermarkets, and also has stores in Argentina and Brazil. It employs around 320,000 workers globally.
It launched a five-year overhaul plan in 2018 to cut costs and boost e-commerce investment to improve profits and sales, to tackle online competitors.
Shore Capital analysts Clive Black and Darren Shirley said if the deal were to be completed “it would be a truly mega-event in the world of food and convenience retailing”.
“We shall be interested in any prevailing investment thesis on rational and synergy. The overlap with British supermarkets is now minimal given Carrefour’s geographic retrenchment and that of Tesco too, so much so that the leading French and British supermarkets now have a European buying alliance,” they said in a note to clients.