All the news on Amazon, Aldi, Lidl, Carrefour, Auchan and more
Large-scale distribution: numbers and moves by Amazon, Aldi, Lidl, Carrefour, Auchan and more. The in-depth study by Mario Sassi
While our vocation for entrepreneurial dwarfism binds us to the quarrelsome backyard, the French and Germans are looking around. The playing field is the world. Industry, telecommunications and transport signal various changes of hands and strengthen the presence of the two countries on the continent.
In large-scale distribution, the big players are closing their ranks while the specter of Amazon and what may be its next move hovers. Spain and Italy in the spotlight. The Seattle company is good at showing the tree while still imagining the forest. Anything can potentially enter its ecosystem. This is its real strength. Aldi is studying how to accelerate its growth, LIDL how to maintain its continental leadership. Discounters know that the uncertainties caused by the pandemic and the risks of a recovery in inflation are in their favor and that 2022 will be their year. So they want to take advantage of it.
In France the spotlights are turned on. Five historical players. Leclerc, Carrefour, Auchan, Intermarché, Système U and two German outsiders such as Aldi and Lidl who in 2021 increased their customers by 900,000 and 400,000 respectively, in addition to some newcomers such as Action and Costco. The competition is therefore very fierce. Alexandre Bompard, CEO of Carrefour, among other things, has been repeating for some time that the French distribution market must concentrate. Carrefour has had great difficulty in recovering profitability in France. Auchan is still in trouble.
In this context, however, it is the "vines" that hold the spot. According to journalists Ivan Letessier and Marie Bartnik of “ Le Figaro ” the Auchan / Carrefour operation would have resumed force. Code name on the confidential document: "Merlot". This is the mission of the Lazard investment bank. Allow the acquisition of “Pinot” (Carrefour), by “Sauvignon”, (Auchan). The goal is to get some investment funds to finance this operation. "Merlot" would become the main distributor in France with over 29% market share in France and a unique international presence in 17 countries ", explains the confidential document sent by Lazard to the identified investment funds. However, French winemakers (and not only) are sure of it. Pinot and Sauvignon do not allow Merlot to be obtained.
However, an investment bank does not think so. It should not be forgotten that last October, Alexandre Bompard, CEO of Carrefour had closed the negotiations by pointing to the fact that the Moulin family, the main shareholder, was not satisfied with the 21.5 euros per share and 70% paid in cash but demanded the full amount in cash. The new offer that Auchan could launch would reach € 23.50 in cash. This would please both the Moulins and the other major shareholder, the Brazilian Abilio Diniz, owner of Galeries Lafayette. So a total of almost 20 billion euros against the 13.5 that represent the value of Carrefour today on the Paris stock exchange where the stock is obviously rising.
Such an offer would certainly find favor with Carrefour shareholders, but official announcements or initiatives are unlikely to take place before the French presidential elections in April. Auchan's loss of market share in key markets such as France and Spain, the solidity of the group's balance sheet after its withdrawal from China and Italy and the significant synergies that would derive from the combination are ideal conditions for presenting a offer according to experts. The AFM would therefore have the support of important investment funds, including Anglo-Saxon ones. According to sources, CVC, KKR and Clayton, Dublier & Rice are cited. The latter invested $ 7 billion in October 2021 to take control of Morrisons, the fourth largest supermarket across the Channel.
Auchan, however, has no debt after the sale of its Chinese branch to Alibaba and leaving Italy. The funds could reach around 6 billion, allowing French control of the new reality. There is no doubt, however, that, albeit in a minority, Anglo-Saxon investors could, with this merger, enter what will become a top player in world distribution. And this, needless to hide it, would raise serious questions in the middle of the presidential election campaign.
To the delicate issue of food sovereignty, which had thwarted the attempt at rapprochement between Carrefour and the Canadian Couche-Tard, there would be added that of the social consequences on the offices, network and purchasing center, without counting the probable intervention of the Competition Authority. The trade unions of the two realities fear the inevitable consequences on employment.
Force Ouvrière, Carrefour's main union, is in a state of excitement and asks to open a discussion table immediately. Also because “the restructuring of purchases, offices, logistics” according to the data of the Lazard bank would bring almost 1.2 billion euros in savings due to synergies. The Mulliez (L'Association Familiale Mulliez – AFM) heirs of the golden age of the textile industry in northern France, owners of Auchan, have meanwhile put aside Francis Cordelette, replacing him with Yves Claude as Executive President and Philippe Brochard as Director General. A new governance put in place probably precisely to manage the operation.
Lazard estimates that the group's turnover could reach 108 billion in 2025, with growing margins and significant synergies. It is a country operation precisely because of the social implications and the inevitable overlaps that would entail the necessary sale of several hundred stores. Therefore, it takes a long time to complete the operation. But the interest in having a national player of that size is very strong for the French government.
The presence of the English fund owner of Morrison, albeit in a minority, makes not only the unions turn up their noses, which with Couche Tard would not have suffered overlaps. Unknowns that are not easy to deal with in a country that always and in any case intends to enhance and defend the national agri-food chain in all its components.
And this is precisely what should make us reflect as a country system. It is certainly not by contrasting the various interests at stake that the national supply chain is strengthened. Especially if inflation were to pick up again. And it is good to remember that it is always the weakest link in a chain that measures its overall strength.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ecco-cosa-contiene-il-documento-riservato-della-banca-lazard-sulloperazione-auchan-carrefour/ on Sun, 30 Jan 2022 06:35:22 +0000.