Couche-Tard is the largest convenience store operator in Canada, according to its website. It employs 109,000 people in North America, where it has more than 9,000 convenience stores, most of which are attached to fuel stations.
The deal would dramatically expand Couche-Tard’s presence in Europe, where it already has 2,700 outlets, including fuel stations, in countries such as Poland, Russia and Sweden. The two groups are jointly worth more than $50 billion.
Carrefour is France’s largest retailer and the third largest grocery chain in Europe by market share, trailing only Aldi and the owner of Lidl, according to Euromonitor. It has more than 10,000 convenience stores, supermarkets and hypermarkets across Europe. It also has a presence in Asia and South America.
The group performed well during the pandemic, posting its best sales performance in at least two decades in the third quarter as it grew e-commerce sales and opened more convenience stores.
Although the smaller format still accounts for less than 10% of sales, it is “very successful” with Carrefour customers, according to the company’s website, which said it wants to open an additional 3,000 of these stores by 2022 from around 7,000 currently.
Stay-at-home orders during the pandemic may have something to do with the growing popularity of convenience stores, which give shoppers easy access to essentials.
Analysts have raised questions over the merits of a potential tie-up between Couche-Tard and Carrefour. Clive Black, head of research at Shore Capital, said that the rationale would need to be explained for “a deal of this magnitude.” Carrefour has a market value of about €14.4 billion ($17.5 billion).
“Forecourts and convenience stores are exceptionally highly valued at the minute and are using their balance sheets to diversify,” Black added.
While size matters in food retail, the differences in geography and format between the two groups would mean limited synergies from a potential merger, according to Bank of America Merrill Lynch analysts Xavier Le Mené and Virginia Montorsi.
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