Auchan (Alcampo) seeks the support of funds to launch a takeover bid for Carrefour

The French company Auchan, owner of Alcampo, is studying making a new offer to take over the Carrefour network, after last October the negotiations for an agreement for value of 16,800 million.

To raise the value of this proposition, Auchan is in conversations with private equity firms that can be associated with the new offer, including CVC Capital Partners, the British fund that participates in our country in Cortefiel or Deoleo.

In this context, Carrefour shares rose last Wednesday on the Paris Stock Exchange for the eighth consecutive day, in what has become the longest streak in four years. Their shares gained up to 6.6% leaving a company with a market value of about 13.4 billion euros. The integration with Carrefour would help the Mulliez family, founder of Auchan, to create the largest French supermarket and strengthen its position against its low-priced German rivals Lidl and Aldi. Any deal would need the backing of Carrefour’s main shareholders, the Moulin family and Brazilian distribution magnate Abilio Diniz.

Previous negotiations

Auchan’s previous negotiations for a sale to Canadian company Alimentation Couche-Tard Inc. failed in early 2021 amid strong opposition from the French government. Already in October, Auchan tried to buy Carrefour at about € 21 per share (€ 16.6 billion), But the talks failed due to their complexity in terms of assessment and structure, according to sources close to the negotiation. Auchan then structured his offering in 70% cash and 30% shares of the resulting company.

A hypothetical deal could create a retail giant with combined sales of € 110 billion per year and a market share in France of almost 30%, in an environment dominated until now by Leclerc, with a 22.7% share, followed by Carrefour, and where Auchan is in fifth place, with 9.2%.

The agreement between two of the large French supermarkets, which would generate staff cuts due to duplication, would also come at a delicate moment for the politics of the neighboring country, which faces presidential elections in April. In addition, could raise competition concerns, as the Moulin family argued in the fall to reject the previous offer.

In addition to its weakening in the French retail sector, Auchan is suffering from the loss of interest among the public in a business model that suffers strong competition from other large hypermarkets in a context of economic crisis.

The challenge of digital transformation

As in Spain, the two French distribution actors involved in this negotiation face the great challenge of digitization accelerated by the pandemic. In this sense, Carrefour presented in November a investment plan of 3,000 million euros to face the growth of electronic commerce for the next four years and, also last year, it announced its alliance with Uber to be able to offer its customers a food delivery service capable of making deliveries in 15 minutes.