French retailer Auchan is exploring another takeover bid for local rival Carrefour SA, Bloomberg News reported on Wednesday, after negotiations for the previous offer failed in October 2021.
Auchan is in talks with a number of private equity firms to bolster Carrefour’s bid, Bloomberg News added.
Both Auchan and Carrefour did not immediately make themselves available for statements.
Carrefour shares rose on Wednesday for the eighth consecutive day, the longest run in four years. They gained up to 6.6% in Paris and rose 3.5% at 5:16 pm 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 become the largest hypermarket chain in France and strengthen its position amid challenges from low-priced German rivals. Any transaction would need the support of the Moulin family, Brazilian retail mogul Abilion Diniz and Carrefour’s core shareholders.
Carrefour talks on sale to Canadian retailer Alimentation Couche-Tard Inc. they collapsed in early 2021 amid strong opposition from the French government. Auchan later tried to buy Carrefour for about 21 euros a share, or 16.6 billion euros, but talks stalled on price and structure, Bloomberg News reported in October.
The French food market is poised for consolidation amid attractive competition from retailers such as Aldi and Lidl. The leader, Leclerc SA, has a market share of 22.7%, followed by Carrefour with 19.4%, according to data from research providers Kantar. Auchan ranks fifth with 9.2%.
The challenges facing hypermarkets also include the need to increase e-commerce capabilities. Carrefour CEO Alexandre Bompard unveiled a plan in November that includes a € 3 billion digital investment effort over the next four years. Last year, the second French hypermarket teamed up with delivery giant Uber Technologies Inc. and also took a stake in the Cajoo delivery start-up.
According to Clement Genelot, an analyst at Bryan Garnier, the Auchan format has lost its appeal to customers. Last month, the Mulliez family brand shook the retailer’s top leadership as it tries to accelerate the food and digital transition, as well as the decision-making process.
“The Mulliez family can’t fix Auchan alone,” Genelot said in an email. “That’s why he has no choice but to merge and merge with Carrefour.”
An agreement between the two giants in France would come at a delicate time, less than four months before the April presidential election. A combination could lead to job cuts due to overlaps, while triggering antitrust control by regulators.
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