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Canadian convenience store chain Couche-Tard has dropped its multi-billion-euro takeover bid for French supermarket giant Carrefour, the two companies confirmed Saturday, after Paris said it would veto the deal.
Carrefour and Couche-Tard said they would pursue "operational partnerships" after the French government signalled it would not agree to the takeover because it could jeopardise food security -- an even more important consideration given the coronavirus pandemic.
The two companies said in a joint statement that they hoped to cooperate in areas such as "pooling purchasing volumes, partnering on private labels, improving the customer journey through innovation, and evaluating ways of optimizing product distribution" after Paris scuppered the deal.
Couche-Tard, which operates internationally under Circle K and other brands, had on Wednesday submitted a non-binding offer for Carrefour, valuing the group at more than 16 billion euros ($19.5 billion).
But France's Economy Minister Bruno Le Maire made his feelings clear on Friday, telling BFM and RMC television that his position was "a polite, but clear and definitive 'No'".
"Food security is a strategic consideration for our country and one does not just hand over one of the large French distributors like that," he said.
"Carrefour is the biggest private sector employer in France with nearly 100,000 employees," he added.
The group, which has more than 12,300 stores of various formats in more than 30 countries, accounts for 20 percent of the food distribution market in France.
- Canadian dismay -
Canada's International Trade Minister Mary Ng expressed disappointment at the talks falling through.
"We regret that Couch-Tard will not be pursuing its investments in French company Carrefour," she said in a statement, adding that "trade and bilateral investments benefit businesses on both sides of the Atlantic and reinforce our economic ties".
"We are however encouraged by the news that Couche-Tard and Carrefour will continue to explore an operational partnership," Ng said.
A Canadian federal source had earlier told AFP that while they could understand concerns over allowing a foreign firm to take over such a large national employer, worries over food security were unsubstantiated.
"We cannot accuse a leading Canadian company like Couche-Tard of endangering the food sovereignty of an entire country," said the source, speaking on condition of anonymity.
Bloomberg reported that negotiations ended after a meeting between Le Maire and the founder of Couche-Tard, Alain Bouchard.
In an attempt to reassure ministers, Bouchard had promised to invest billions in Carrefour and to maintain employment for two years. The group was to be listed on the Paris Stock Exchange in parallel with Canada, according to Bloomberg.
The French government's reaction also caused surprise at Carrefour itself, according to sources who said Le Maire's comments were "premature" given that merger discussions had barely begun.
Carrefour generated a net profit of 1.3 billion euros ($1.5 billion) in 2019 on revenue of 80.7 billion euros.
It employs 320,000 people worldwide.
Couche-Tard meanwhile has a network of more than 14,200 stores, in the United States and several European countries, as well as in Latin America and southeast Asia.
It earned a net profit of $2.4 billion on sales of $54 billion in its last complete year.