The French government hardens its position against the takeover of Carrefour

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In this news, we discuss the The French government hardens its position against the takeover of Carrefour

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PARIS (Reuters) – France on Thursday adopted a firm line against any foreign takeover of retailer Carrefour, dealing a heavy blow to a nearly $ 20 billion bid approach by Canadian Couche-Tard.

French Finance Minister Bruno Le Maire told Reuters the government wanted to preserve the country’s food security and sovereignty.

“The takeover of Carrefour by a foreign company would be a major difficulty for all of us,” Le Maire said in an interview with the Reuters Next conference.

“Food security is at the heart of the strategic challenges of all developed countries,” he said.

Along with other retailers, Carrefour, with around a fifth of the grocery market in France, has played a major role in ensuring a steady food supply during the COVID-19 pandemic.

But the convenience store operator Alimentation Couche-Tard’s offer for Carrefour – the largest distributor in continental Europe – also raises other political considerations, the group being one of the largest employers in France.

Carrefour shares fell on Thursday as the French government stressed its opposition to a deal, with Labor Minister Elisabeth Borne also saying she was against it.

Shares were down 1.7% at 2:29 p.m. GMT after jumping 17% on Wednesday.

Morningstar analyst Ioannis Pontikis said the market is likely to assess the likelihood of the deal going through to be low.

Couche-Tard’s approach also raised eyebrows with analysts in part because they saw little potential for cost savings – the group, focused on gas stations in North America, has little geographic overlap. with Carrefour.

But that could be a plus in terms of preserving jobs, while a recovery could be interesting for Carrefour if it provided financial firepower for investments in areas such as e-commerce.

Traditional retailers, including Carrefour, are trying to reinvent themselves to fight growing competition from Amazon.

A source close to Carrefour said the group was surprised by Le Maire’s immediate and fierce opposition to the deal.

“We are surprised by this reaction as we are at a very preliminary stage,” the source told Reuters.

Another source with knowledge of the matter said it was too early to say the deal would not be done.

The French government came out in 2005 to protect large French companies amid rumors Danone could receive a takeover bid from PepsiCo Inc.

The country has since tightened takeover rules to protect French companies deemed strategic, especially under the presidency of Emmanuel Macron, who will face a presidential election in 2022.

During the pandemic, Macron stepped up calls to protect French sovereignty in areas such as health and industry, although the former investment banker tried to strike a balance with a pro-business approach.

Couche-Tard made a non-binding offer of 20 euros per share for the French grocery group on Wednesday, mainly in cash.

A source close to the talks told Reuters that 20 euros per share was not enough but was a starting point for the talks. The first contact between the two companies took place late last year and Couche-Tard sent its first letter in early January, the source said.

In a statement Wednesday, Carrefour acknowledged Couche-Tard’s approach to discussing a combination.

Reporting by Leigh Thomas, Dominique Vidalon, Gwenaelle Barzic, Matthieu Protard, Sarah White and Keith Weir; edited by John Stonestreet and Jane Merriman

Original © Thomson Reuters

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