Carrefour’s missed deal shows consolidation is difficult

Carrefour Marsilles

NEW YORK: It’s been a tough year for Alexandre Bompard. Attempts by the Carrefour SA boss to create a supermarket champion in France are proving elusive.

Talks on a deal to tie up the publicly listed grocer with privately held rival Auchan have failed, Bloomberg reported over the weekend.

The two sides were discussing a €16.6bil (US$19bil or RM79.2bil) combination that would have seen the Mulliez family, the owners of Auchan, hold a majority stake in a combined entity.

Disagreements over the deal structure proved too hard to overcome, people familiar with the situation said. The talks collapsed less than a year after Carrefour explored a sale to Canada’s Alimentation Couche-Tard Inc.

That transaction failed after the government intervened to prevent a foreign buyer from snapping up the biggest private employer in France, the year before crucial presidential elections scheduled for April 2022.

Bompard, a deal maker who engineered the combination of electronics retailer Darty with book-and-electronics chain Fnac, has been trying to shore up Carrefour’s lagging share price with buybacks, improved operational performance in its crucial home market, greater free cashflow generation and targeted merger and acquisition (M&A) deals.

Yet during his tenure since July 2017, shares of the grocer have lost more than a quarter of their value. Part of the difficulty lies in timing.

“The French grocery market looks theoretically ripe for consolidation. But, in practice, don’t expect any major deal within 12-18 months,” Clement Genelot, analyst at Bryan Garnier, said by email. — Bloomberg