Carrefour: French policy kills Canadian candidacy to create one of the first supermarket groups in the world

In a joint statement on Saturday, the French supermarket chain crossroads (CRERF) and Couche-Tard (ANCTF), the owner of Circle K, said talks about a € 16.2 billion ($ 19.5 billion) transaction “are no longer ongoing.”

The deal would have created the world’s fourth-largest supermarket chain based on 2019 sales, after Walmart (WMT), Owner of Lidl Schwarz Group and Kroger (KR), according to Euromonitor. Carrefour is one of the largest grocery stores in Europe with 10,000 convenience stores, supermarkets and hypermarkets across the continent. Couche-Tard operates 9,000 convenience stores in North America and is expanding its presence in Europe. The two groups together are worth around $ 50 billion.

“It’s a courteous but clear and definitive no,” he said. “What is at stake? It is the food security of our country,” he added, stressing that the pandemic has highlighted that “food security is priceless”.

France has tightened the rules governing foreign takeovers in recent years and in 2020 broadened the list of sectors requiring government approval to include agricultural activities contributing to national food security. Carrefour controls 20% of food distribution in France, according to Le Maire.

But electoral politics may have played a more important role. A takeover of France’s largest private sector employer by a foreign company would have bolstered the country’s far-right National Rally 15 months before the presidential election, said Fabienne Caron, analyst at Kepler Cheuvreux.

The reason for food safety “hardly makes sense,” Caron wrote in a note to customers on Monday, adding that foreign grocers such as Lidl are operating efficiently and mainly selling French products. The steps to block the deal are “all related to politics,” she added. “The agreement is too close to the presidential elections and the risk of giving winds to the far right party is too great.”

The pandemic has also revealed how much France depends on abroad for vital health equipment, such as surgical masks. In this context, and given the upcoming elections, the government “had more to lose than to gain by accepting such an offer,” she told CNN Business. “The timing was bad.”

Investors were skeptical of a deal to combine two groups with significant differences in geography and format, lowering Couche-Tard’s stock price by nearly 11% last week.

– Gaëlle Fournier contributed to the reporting.