Carrefour shares surge 10% after Couche-Tard merger approach

[PARIS] Shares in continental Europe's biggest retailer Carrefour rose 10 per cent on Wednesday after Canadian convenience-store operator Alimentation Couche-Tard said it had initiated exploratory talks on a potential merger transaction.

Consolidation had been expected in the European and French supermarket sectors as competition from online rivals such as Amazon intensifies.

Some analysts questioned whether Couche-Tard's move would lead to synergies between the two groups and help Carrefour see off the competition.

There is no certainty at this stage that these discussions will result in any agreement or transaction, Couche-Tard said.

Carrefour, which described the approach as "friendly", said talks were preliminary.

Carrefour shares, which have risen 10 per cent so far this year, were up 6.7 per cent at 16.52 euros by 8.42am GMT.

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"Given the nature and location of ATD's businesses, we see little scope for synergies. Whilst only half of Carrefour's sales are in France, we also note there are few tougher grocery markets with a number of large, well-run independent French supermarket groups," Citi analysts said.

Carrefour launched a five-year overhaul plan in 2018 to cut costs and boost e-commerce investment to improve profits and sales, to tackle online competitors.

"Simply put Couche-Tard is a dominant fuel-anchored convenience player while Carrefour is heavily biased to large weekly baskets and a disproportionate store bias to hypers and supers," Jefferies analysts wrote.

Jefferies added that that geographical overlap between Couche-Tard's 80 per cent North America-based sales and Carrefour's European and Latin American sales was "virtually non-existent".

Raymond James analysts said: "If the potential transaction was for Carrefour's convenience stores segment only, we could better understand the strategic rationale."

With food retailers across the world benefitting from a surge in demand as more consumers stay home, Carrefour reported a robust third-quarter performance at home, as well as in other key markets Brazil and Spain.

In 2018, Carrefour and French rival Casino were locked in a dispute after Casino said it had rejected a tie-up approach from Carrefour that Carrefour denied making.

REUTERS