The convenience store group, Alimentation Couche-Tard Inc. has approached French supermarket chain Carrefour on a friendly deal. The group which owns Circle K convenience stores, confirmed on Tuesday it had started “exploratory discussions” with Carrefour.
The group owns more than 14,200 convenience stores around the world and its retail network spans 2,700 stores in countries such as Ireland, Poland, Scandinavia and the Baltics.
“A sign of the times for retail and reminiscent of the recent deal in the UK where Walmart sold a majority stake in supermarket chain Asda to a consortium led by the Issa Brothers, owners of petrol forecourt firm EG Group, and TDR Capital.
France has been one of Europe’s toughest retail markets, with subdued economic growth holding back consumer spending while intense competition among grocers has squeezed pricing and margins. A pioneer of the hypermarket format, Carrefour has lost ground in recent years to market leader Leclerc and the German discounters, while forays into overseas markets such as Latin America and China have produced mixed results. Under CEO Alexandre Bompard’s Carrefour 2022 plan, the group has been cutting costs by scaling back its over-spaced hypermarket operations, while expanding in e-commerce and organic food.
Couche-Tard owns the Circle K chain and has a network of more than 9,000 convenience stores in North America, most of which also offer fuel retail, along with about 2,700 locations in Europe, in Scandinavia, Ireland, Poland, the Baltic States and Russia. A relatively young business (it started from a single store in a Montreal suburb in 1980) and is much smaller than Carrefour. Carrefour generated sales of €80.7 billion in 2019, while according to its latest annual report, Couche-Tard posted turnover of US$54 (€44 billion in its staggered fiscal year. Of course, negotiations are at a very early stage, but the stock markets have responded positively so far - Carrefour shares soared by more than 10% on the Paris Bourse this morning. Such a deal would have ramifications for the whole French grocery sector, where Aldi has recently acquired 545 Leader Price stores from the Casino group.”