France’s Finance Minister on Thursday said any takeover of French retailer Carrefour by a foreign company would be a “major difficulty,” as the government wants to preserve the country’s food security and sovereignty.
Canadian convenience-store operator Alimentation Couche-Tard’s near $25 billion takeover approach for Carrefour – continental Europe’s largest retailer – has also raised French government concerns about job security at one of the country’s largest employers.
“Having Carrefour being bought by a foreign company would be a major difficulty for all of us,” Bruno Le Maire said in an interview at the Reuters Next conference.
“Food security is at the core of the strategic challenges of all developed nations,” he said.
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Labour Minister Elisabeth Borne underlined the political opposition to a takeover of Carrefour by Alimentation Couche-Tard, calling for no change in the company’s current shareholding structure.
“I am in favor of not questioning Carrefour’s current shareholding structure and allowing (the company) to pursue its strategy, so (I am) opposed to a takeover,” Borne told Europe 1 radio.
Shares in Carrefour pulled back following the government’s opposition, after a 17 per cent jump on Wednesday.
Shares were down 5.33 per cent at 11:21.
Morningstar analyst Ioannis Pontikis said the market was probably pricing in the low likelihood of the deal going through due to the political hurdles.
A source close to Carrefour said the company was surprised by Le Maire’s comments, which the source said were premature.
“We are surprised by this reaction as we are at a very preliminary stage,” the source told Reuters.
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A source with knowledge of the matter also told Reuters it was too early to say the deal would not go through.
Paris spoke up in 2005 to protect French big business amid rumors that Danone might receive a takeover bid from PepsiCo Inc. The country has since tightened takeover rules to protect French companies deemed strategic, including under the presidency of Emmanuel Macron.
Couche-Tard on Wednesday made a non-binding 20 euros per share offer for the French grocery group, largely in cash. The Quebec-based company has given no further detail on its plans for the combined companies.
A source familiar with the discussions told Reuters that 20 euros per share was not enough but was a starting point for discussions. Initial contact between the two companies came at the end of last year and Couche-Tard sent its first letter in early January, the source said.