No appetite for $20-billion Carrefour offer

PARIS — France all but killed off a possible Us$20billion takeover of Carrefour by Canada's Alimentation Couche-tard on Friday, saying it would oppose any deal to ensure the security of its food sector.

The French government's intervention, with ministers shooting down the offer less than 24 hours after talks were confirmed, sparked disquiet in some business circles given the sector has not previously been seen as a "crown jewel".

Some politicians and bankers said the pushback could tarnish French President Emmanuel Macron's probusiness image, while others highlighted that the COVID19 crisis had forced more than one country to redefine its strategic national interests.

"Food security is strategic for our country so that's why we don't sell a big French retailer," Finance Minister Bruno Le Maire told BFM TV.

"My answer is extremely clear: we are not in favour of the deal. The no is polite but it's a clear and final no."

Carrefour, which acknowledged Couche-tard's approach to discuss a combination on Wednesday, had no immediate comment.

The swift French slapdown was a surprise even within the retailer given how preliminary talks were, a source familiar with the matter said, while people close to Couchetard said the Canadian group was also startled by the rhetoric.

The deal looked increasingly likely to fall through, several people close to the talks told Reuters, although discussions about a potential takeover were still ongoing.

Quebec Economy Minister Pierre Fitzgibbon told reporters that he would speak with France's finance minister, as the province goes on a charm offensive to promote the deal.

The COVID-19 pandemic has thrust supermarkets into the spotlight globally as they worked to keep customers fed and supplied with household basics like toilet paper.

But with just under 20 per cent of France's groceries market held by Carrefour, behind local rivals like Leclerc, even some labour representatives questioned whether the group was inherently strategic.

"It seems like a bit of a weak argument . . . . We're not the number one food retailer," Michel Enguelz, who represents Carrefour's hypermarket employees at France's FO union, said.

Enguelz said he was more concerned about jobs. With around 105,000 French staff, Carrefour is the country's top private employer, and an acquirer could take a more drastic stance on its underperforming out-of-town hypermarkets.

ELECTION GAMBIT?

Pascal Dupeyrat, a French lobbyist specialising in corporate takeovers at Relians, also said jobs were likely to be Macron's big concern less than two years from a presidential election.

France has long been a combative protector of its interests, a mantle taken up even by Macron, a former investment banker, when he came to power in 2017.

The president pushed to renegotiate the terms of a Franco-italian shipping deal soon after his election, though as economy ministry he also oversaw the sale of companies like telecoms group Alcatel, which ended with job cuts under new owner Nokia.

The Carrefour fallout could further muddle his record, despite efforts to woo international funds with "Choose France" summits and a reform drive.