French Grocer Auchan Weighs Fresh Bid for Rival Carrefour

(Bloomberg) -- French grocer Auchan is exploring a fresh attempt at a takeover of domestic rival Carrefour SA, people with knowledge of the matter said.

Auchan has revived work on a potential deal for Carrefour after earlier negotiations collapsed in the autumn, the people said, asking not to be identified because the discussions are private. It has held talks with private equity firms including CVC Capital Partners about teaming up on a bid, according to the people.

Shares of Carrefour rose for the eighth straight day on Wednesday, the longest streak in four years. They gained as much as 6.6% in Paris and were up 3.5% at 5:16 p.m. in the French capital, giving the company a market value of about 13.4 billion euros ($15.2 billion).

A combination with Carrefour would help Auchan's founding Mulliez family create the biggest grocer in France and strengthen its position amid challenges from low-priced German rivals. Any deal would need the backing of Carrefour's anchor shareholders, the Moulin family and Brazilian retail tycoon Abilio Diniz.

Deliberations are ongoing, and there's no certainty they will lead to an offer, the people said. Representatives for Auchan, Carrefour and CVC declined to comment.

Carrefour's talks over a sale to Canadian retailer Alimentation Couche-Tard Inc. collapsed in early 2021 amid strong opposition from the French government. Auchan later made an attempt to buy Carrefour at about 21 euros a share, or 16.6 billion euros, only to see discussions stall over price and structure, Bloomberg News reported in October.

The French grocery market is seen as ripe for consolidation amid cutthroat competition from retailers such as Aldi and Lidl. The leader, Leclerc SA, has a 22.7% market share, followed by Carrefour with 19.4%, according to data from research provider Kantar. Auchan ranks fifth, with 9.2%.

The challenges facing grocers also include the need to boost e-commerce capabilities. Carrefour Chief Executive Alexandre Bompard presented a plan in November which includes a 3-billion euro digital investment effort in the next four years. Last year, the number 2 French grocer teamed up with delivery giant Uber Technologies Inc to offer 15-minute groceries in France and also took a stake in delivery start-up Cajoo.

Auchan meanwhile has been plagued by its exposure to the largest hypermarkets, a big one-stop shop that sells everything from food to clothes. In their case, many located in city suburbs in the Northern part of France, a region that's facing economic difficulties, according to Clement Genelot, analyst at Bryan Garnier. This format has been losing its appeal with customers.

Last month, the Mulliez brand shook up the top management at the retailer as it seeks to accelerate the food and digital transitions as well the decision-making process, it said then.

“The Mulliez family cannot fix Auchan on its own,” Genelot said by e-mail. “This is why it has no other choice than an M&A deal with Carrefour.”

A deal between two of France's biggest grocers would come at a sensitive time, less than four months ahead of presidential elections in April. A combination could lead to job cuts due to overlaps, while triggering antitrust scrutiny from regulators.