CRRFY Carrefour SA (PK)

By Noemie Bisserbe 

PARIS -- The French government shot down an offer from Canada's Alimentation Couche-Tard Inc. to acquire hypermarket chain Carrefour SA, according to people familiar with the matter, saying the move threatened jobs and France's food security amid the Covid-19 pandemic.

Couche-Tard's offer to buy Carrefour for 16.1 billion euros, equivalent to $19.66 billion, would have created the world's third-largest grocery retailer, behind Walmart Inc. and Lidl owner Schwarz Group. But French Finance Minister Bruno Le Maire told Couche-Tard Chairman Alain Bouchard in a closed-door meeting in Paris on Friday that he was opposed to the takeover, according to people familiar with the matter.

Mr. Le Maire told the executive the sale would put France's food security and tens of thousands of jobs at risk, the people said. Carrefour is one of the country's largest employers with 105,000 staff.

Canada Prime Minister Justin Trudeau told reporters he was aware of discussions between Couche-Tard and the French government but declined to comment further.

Mr. Le Maire later spoke on the phone with Quebec's economy minister, Pierre Fitzgibbon, about the offer. Mr. Fitzgibbon's office didn't immediately respond to a request for comment.

The French government's intervention is a sign of how the Covid-19 pandemic is exacerbating protectionism. Under French law, the government can block takeovers of domestic companies by foreign buyers in sectors deemed strategic, such as energy, defense and the more recently added sector of food distribution. The use of lockdowns to fight Covid-19 has underscored the vital role that grocers like Carrefour play in delivering essential goods to the public, Mr. Le Maire told French TV.

"The day you go to Carrefour... and there's no more pasta or rice or other essential goods, what do you do?" Mr. Le Maire added.

Public fears over food and equipment shortages soared in the spring as borders closed and governments scrambled to secure vaccines and protective-gear like surgical masks. In the U.K., the government proposed in November new legislation to bolster its powers to block foreign takeovers of British companies. Under the proposed rules, investors would have to notify the government about transactions in 17 sectors including nuclear, artificial intelligence, transport, energy and defense.

Protectionism has also risen in Italy, Spain and Germany over the past year as concerns grow that companies whose share prices have slumped because of the coronavirus outbreak are vulnerable to unwanted approaches from bargain hunters. European governments have strengthened their protections against foreign business takeovers to shield industries that are deemed strategic or important to the country's national security.

The 31-year-old Couche-Tard is the largest independent convenience store operator in North America by number of stores, operating under brands such as the Corner Store, Circle K and Holiday. It also operates a network of gas stations in Europe and has stores there and elsewhere in the world.

Couche-Tard sent Carrefour a nonbinding offer letter in early January and met with the French company's management on Jan. 8 in Paris, according to the people familiar with the negotiations.

Carrefour said the approach was friendly. On Tuesday evening, Carrefour Chief Executive Alexandre Bompard sent a message to Mr. Le Maire to let him know about the ongoing negotiations, according to the people familiar with the negotiations.

The following day, Couche-Tard's chief executive flew back to Paris to reassure the government with pledges on jobs, suppliers, governance and management, according to people familiar with the matter.

Mr. Bouchard, Couche-Tard's chairman, flew in on Friday morning to meet with Mr. Le Maire, according to the people familiar with the negotiations.

On Friday Mr. Le Maire reiterated his opposition to the deal in a second TV interview.

"My answer is extremely clear," he said. "It's no. A polite but clear and final no."

Write to Noemie Bisserbe at noemie.bisserbe@wsj.com

(END) Dow Jones Newswires

January 15, 2021 14:33 ET (19:33 GMT)

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