The policy clashes with $ 20 billion in Canadian shopping trips to Paris

Photographer: Jeremy Suyker / Bloomberg

Food Couche-Tard Inc. founder Alain Bouchard hoped to recoup $ 20 billion offer Carrefour SA when it arrived at the French Ministry of Finance, whose headquarters protrudes over the Seine as an aircraft carrier stranded east of Paris.

After waiting for a brief hearing with Finance Minister Bruno Le Maire, Bouchard received the message: The proposed deal was dead on arrival, torpedoed by the French political opposition.

Friday’s meeting culminated in a tumultuous week for Couche-Tard and Carrefour. Bouchard, a self-made billionaire who had transformed an obscure Canadian gas station operator into an empire of 14,200 shopping malls through acquisitions, wanted to take the next step. The purchase of the French supermarket would have turned Couche-Tard into a global retail giant, along with others Walmart Inc.

However, the opening it ended just four days after it came to light, and companies said they would seek a weaker alliance and send Carrefour shares up 7.6% lower on Monday. Assigning one of the largest owners of French supermarkets to foreign ownership was impossible at a time when Covid-19 closures underscored the strategic importance of the country’s food supply, Le Maire said.

Couche-Tard is not the first foreign acquirer to be hampered by French concerns about economic sovereignty, but he underestimated the flag reflections that have sharpened in the midst of the Covid-19. With the regional elections scheduled for later this year and the presidential vote scheduled for 2022, which would allow the country’s largest private businessman to fall into foreign hands, it could have given nationalist leader Marine Le Pen and the left Jean- Luc Melenchon a new cause held to attack centrist President Emmanuel Macron.

Poor coordination

“It wasn’t the time to make a deal like that,” said Fabienne Caron, an analyst at Kepler Cheuvreux. “The government had much more to lose than to gain. The real reason is politics. “

The companies aggravated their miscalculation by hunting down Le Maire and Macron. The finance minister learned of the talks on Tuesday afternoon via a text message from Carrefour CEO Alexandre Bompard, according to a Finance Ministry official who asked not to be appointed, citing the rules of the government. A Bloomberg News arrived at the time the report revealed the conversations that night.

Read more: Couche-Tard faces grilling investment as Carrefour deal fails

This article is based on interviews with people familiar with the discussions and the government’s position, who asked that they not be identified because of the sensitivity of the issue. Carrefour and Couche-Tard representatives declined to comment.

Talks between the two companies began in the fall, after Couche-Tard failed in an effort to buy Marathon Petroleum Corp. Speedway Gas Station Network Previous acquisitions had amassed Couche-Tard from a single store in a Montreal suburb to a Texas point of sale operator in Hong Kong.

Carrefour, best known for its giant out-of-town stores that sell everything from baguettes to t-shirts and grass seeds, has been challenged by rising online shopping and growing Lidl discounts and Aldi. Under Bompard, it has downsized its hypermarkets while investing in convenience stores, e-commerce and organic food, but shares had fallen more than a third from its 3-and-a-half-year term before Tuesday’s news.

Friendly talks

Later in the evening, after the leak, both companies confirmed the discussions, noting that the negotiations were friendly. The next day, Carrefour shares rose, and Couche-Tard confirmed that it weighed in at a price of 20 euros per share.

However, in government offices, opposition was growing. On Wednesday afternoon, Le Maire spoke with Bompard and major Carrefour investors, such as The president of LVMH, Bernard Arnault, who has a 5.5% stake. Late in the day, the finance minister went on television to say he opposed the deal.

A representative of Arnault did not respond to any requests for comment.

Carrefour advisers and some analysts saw an element of stance on Le Maire’s hard line, calculating that the finance minister would eventually give in. They had reason to believe that this agreement could be seen differently from the one proposed for 2005 PepsiCo Inc. a French yogurt maker Danone SA, which was blocked for reasons of sovereignty.

After all, Macron is a former Rothschild banker who took office four years ago with the vow to shake up a French economy hampered by state interventionism. Couche-Tard comes from Quebec, which shares close linguistic, cultural and commercial ties. And Carrefour could use a deep-pocket partner to fund its incomplete change.

In 2019, France led European countries in a ranking of foreign investment projects by the accounting firm EY. Its companies have also stepped up overseas expansion, as LVMH recently completed its $ 16 billion purchase of Tiffany & Co. Some French champions have stumbled lately, but most notably drug maker Sanofi, the Covid vaccine project faces a delay months later dosing problem during testing.

Couche-Tard was willing to respond to French concerns with commitments to invest 3 billion euros ($ 3.6 billion) in Carrefour, while guaranteeing jobs and committing to maintaining the retail headquarters in France. in addition to listing the shares of the combined companies in the two countries.

“Greater difficulty”

Le Maire appeared to open the door slightly at a conference on Thursday when he described Carrefour being acquired by a foreign entity as a “major difficulty”. On Friday morning, he tried to clear up any ambiguity, stating in a morning appearance on television that his position on the Couche-Tard approach was an “unclear and definitive one.”