COUCHE-TARD MULLS PURCHASE OF FRENCH GROCER.

Alimentation Couche-Tard Inc., the Montreal convenience-store giant that owns the Circle K chain, is exploring a potential acquisition of French grocer Carrefour SA, people with knowledge of the matter said.

Couche-Tard has made an initial approach to Carrefour to discuss a combination, according to the people, who asked not to be identified because the information is private. There's no certainty the deliberations will lead to a transaction, the people said.

Shares of Carrefour have risen 10 per cent in Paris trading this year, giving the company a market capitalization of 12.6 billion euros (US$15.4 billion) at Tuesday's close. Couche-Tard shares slipped 2.2 per cent after the Bloomberg News report, closing at $41.31 in Toronto to value the company at almost $46 billion. Representatives for Couche-Tard and Carrefour couldn't immediately be reached for comment.

Entering the supermarket business would represent a major shift for Couche-Tard, which built a convenience-store empire by methodically acquiring smaller rivals, first at home in Canada before entering the U.S. in 2001 and Europe in 2012. Lately its focus had been on the U.S. and Asia Pacific, where it tried to buy Caltex Australia Ltd., before deciding against a revised offer during the pandemic. A deal with Carrefour would help expand its presence in Europe, where its potential target operates more than 2,800 supermarkets and 703 larger-format hypermarkets, and in Latin America, where it has stores in Argentina and Brazil.

Couche-Tard has a network of more than 9,000 convenience stores in North America, most of which also offer fuel retail, according to its website. It also had about 2,700 locations in Europe as of October last year.

A pioneer of the hypermarket format, Carrefour lost ground in recent years to Leclerc SA and German discounters in France, while forays into overseas markets such as Latin America and China have produced mixed results. Carrefour two years ago sold an 80 per cent stake in its China unit to local retailer Suning.com Co. It had about 5.2 billion euros in net debt as of June last year, down from almost 6 billion euros a year earlier, partly due to proceeds from the China deal.

Under Chief Executive Officer Alexandre Bompard, Carrefour has cut costs by scaling back the company's giant stores, which sell everything from produce to clothing and housewares, while expanding in e-commerce and organic food. France has been one of Europe's toughest retail markets, with subdued economic growth curbing consumer spending while intense competition among grocers has squeezed pricing and margins. In 2018, Carrefour struck a purchasing alliance with the U.K.'s Tesco Plc to increase their clout with suppliers.