What does Alimentation Couche-Tard want to achieve with a possible takeover of Carrefour? Can a petrol shop specialist save the hypermarket? One thing is clear: the French retail group is for sale…
Hunter becomes prey
In France, some people may have choked on their café au lait on Wednesday morning, because it was a bit of a surprise that Alimentation Couche-Tard (ATD) made a takeover bid for Carrefour. The French food retailer, which itself had announced that it would play a role in the further consolidation of the European supermarket sector, is now suddenly turned from a hunter into a prey. That wasn’t the initial plan. But top executive Alexandre Bompard is talking to the Canadians.
Couche-Tard’s size should certainly not be underestimated: the group has grown strongly through acquisitions and is now active in North and Central America, Europe, the Middle East and Asia, with 14,200 shops, 131,000 employees and a turnover of 44.4 billion euros. This is no mean feat – although it must be said that more than half of this turnover comes from fuel sales. This may be the first explanation for the unexpected move: does the group want to become less dependent on petrol stations? A valid argument.
No synergy
Couche-Tard would like to offer 20 euros per share, which would value Carrefour at 16.4 billion euros (against 12.6 billion on Wednesday morning). Investors are happy: the Carrefour share price was already 15% higher on Wednesday evening. It is true that the share has not performed brilliantly in the past two or three years. Bompard has set some things in motion at the group, but it is still not enough. Carrefour underperforms compared to many of its peers – and certainly compared to Couche-Tard.
But the big question analysts are asking is whether Couche-Tard and Carrefour are actually a match. After all, their business models are far apart. The Canadians are the specialists of the petrol shop. In other words, they sell petrol, sweets, coffee and cigarettes. One wonders whether such a company could be the right partner to revive the ailing hypermarket business. “Given the nature and location of ATD’s business, we see little scope for synergies,” Citi analysts tell Reuters. “A potential offer to acquire Carrefour would vastly expand Couche-Tard’s operating model to extend into grocery and hypermarket operations, and isn’t an obvious move for the convenience-store operator,” Bloomberg believes.
“Carrefour is for sale”
There is no guarantee whatsoever that the talks will lead to a deal. But the fact that Alexandre Bompard did not immediately proclaim “non” and will indeed sit around the table with the interested buyer, could be an important signal: a sale of Carrefour is no longer unthinkable. At the right price and with the right partner, of course.
“There is now a ‘for sale’ sign hanging on the window at Carrefour,” thinks retail expert and marketing professor Marcel Corstjens (INSEAD) in a reaction to RetailDetail. “If you had asked me for a list of a thousand companies that could be interested in taking over Carrefour, Couche-Tard would not have been on it. Interestingly, their share dropped 10% by Wednesday evening. Other hunters will now show up, for whom Carrefour is worth more. How often do you get the chance to buy a retailer with an impressive international footprint, huge selling space that can also partly be used as ‘dark stores’, and relatively cheap?” He sees in Carrefour, for example, a suitable prey for Amazon. Could be interesting…
