€16.2B Merger Between Carrefour and Couche-Tard Blocked By French Government

The proposed takeover of Carrefour by Canadian convenience store and petrol station conglomerate, Couche-Tard, has been cancelled after French finance minister, Bruno Le Maire, refused to approve the potential €16.2 billion merger deal.

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Carrefour Group (0NPH) is one of the world’s leading food retailers, with around 12,300 stores in more than 30 countries and employs more than 320,000 people.

Couche-Tard is the largest convenience store and petrol station owner in North America, and according to the Financial Times, the merger of the two companies would have created the third biggest retail company in the world worth more than $50 billion.

Despite the breakdown in talks, Carrefour and Couche-Tard have agreed to extend their discussions to building potential operational partnerships in order to take advantage of each other’s overlapping purchasing, distribution and innovation networks. (See Carrefour stock analysis on TipRanks)

Kepler Cheuvreux analyst Fabienne Caron reiterated his Buy rating on Carrefour last week, setting his price target at €20. This implies upside potential of around 20% from current levels.

Caron believes that the timing of the deal was wrong, saying, “It wasn’t the moment to do a deal like that…The government had much more to lose than to win. The real reason is politics.”

Consensus among analysts is a Moderate Buy based on 4 Buys and 2 Holds. The average price target of €16.60 suggests that Carrefour shares are fully priced, with limited downside potential of around 1% over the next 12 months.

News Sentiment for Carrefour is Neutral based on 14 articles over the past seven days. Exactly 50% of the articles have a Bullish Sentiment, compared to a sector average of 65%.