The French Minister of the Economy, Bruno Le Maire, opposes the merger between the two supermarket giants Carrefour and Couche-Tard. An almost classic protectionist reflex, under the pretext of ‘food sovereignty’.
Discussions between the Canadian Couche-Tard and the French Carrefour are still in the exploratory phase. For now, we are still talking about a ‘friendly offer’, which would have the support of the CEO of Carrefour, Alexandre Bompard. It now remains to be seen whether the two sides will come to an agreement.
Failing that, Couche-Tard could always turn directly to Carrefour shareholders, with a hostile takeover bid. But it is a much riskier strategy. In general, the purchase price is much higher than in an amicable agreement and the chances of success are lower.
But Couche-Tard will also have to take the French government into account. The French authorities are always on the alert when a French company threatens to fall into foreign hands. An example ? The case of Promodès supermarkets in 1999. The French government has done everything to ensure that they are recovered by Carrefour, fearing that Wal-Mart will recover them. And it’s no different now. The Minister of the Economy Bruno Le Maire has already made it known that he did not like this story.
‘The day you go to Carrefour, to Auchan, and there will be no more pasta, no more rice, how will you do?’
Bruno Le Maire, French Minister of the Economy
On the France 5 television channel, Le Maire declared that Carrefour is, according to him, ‘an essential link in the food security of the French’. Words that Couche-Tard takes very seriously. According to a decree on the control of foreign investments, the minister has the right to intervene in the negotiations in the name of food security. It is therefore considered a threat to the project by the Canadian company.
However, the argument of Bruno the Mayor does not really stand up. Carrefour is not the only large group of supermarkets in France. There is also Auchan, E. Leclerc and Système U. The French are still spoiled for choice when it comes to shopping in a real French establishment. Furthermore, it is not really in Couche-Tard’s best interest to offer empty shelves in the future.
However, Le Maire is not discouraged. On France 5, he did not hesitate to push his thinking a little further. ‘The day you go to Carrefour, or even to Auchan, and there will be no more pasta or rice, what are you going to do?’ This is somewhat dramatic. As if Couche-Tard were going to ship the bags of rice planned for France to Canada.
Bernard Arnault seeks the exit
The question is to know what support the Minister of the Economy can count on. There is a good chance that Canadians will reach a deal with Carrefour. And the main shareholder, Bernard Arnault (the billionaire best known for the luxury group LVMH) has been the head of the group since 2007. He shares shares mainly with Colony Capital.
During 2020, Carrefour shares continued to deteriorate. Attempts to block the stock market by selling this investment have often failed. A public offering would be the best way for shareholders to get off the boat quickly.
Politically, it is also far from certain that Le Maire will receive the necessary support from the president. Emmanuel Macron. The Head of State is especially focused on getting out of the Covid-19 crisis. Now is not the perfect time to campaign against a deal between two private companies.
Macron has a credibility problem
The French president, in view of his track record, could hardly oppose an agreement between the two firms. Between 2008 and 2012 he was an investment banker for Rotschild & Cie. He notably became a millionaire during this period thanks to the bonuses earned during mergers and acquisitions. His most important achievement? The acquisition of the baby food division of pharmaceutical giant Pfizer by the food group Nestlé.
He then became Minister of the Economy under the presidency of François Hollande between 2014 and 2016. During his mandate, he gave many more freedom of movement to companies. The Macron law is also still in everyone’s memory. This law made it possible to make working hours more flexible, to liberalize certain professions and to help businesses. In short, it would be very difficult for Macron to accept a protectionist blockade after all of his market opening measures.
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