Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

The logo of a Couche-Tard convenience store is seen in Montreal on Jan. 13, 2021.

CHRISTINNE MUSCHI/Reuters

For 40 years, shoppers and investors have thought about Alimentation Couche-Tard Inc. as a convenience store chain that sells soda pop and cigarettes. Now, they’re waking to the realization that it wants to be much more.

Couche-Tard executives, forced to the defensive over the company’s aborted US$20-billion takeover play for French grocer Carrefour SA, explained their rationale for the deal on a conference call Monday. But they also sketched the broad outlines of a growth strategy for the company that goes beyond what even its closest followers had previously imagined.

Couche-Tard leaders said that although owning supermarkets is outside the company’s core competency, combining the two businesses would have yielded significant opportunities and positive returns for shareholders. And they said they’re exploring moves into other “adjacent retail spaces” to the corner-store sector, including quick-service restaurants and dollar stores, where markets outside North America are less dominated by big chains.

Story continues below advertisement

Marriage of convenience? What’s driving Couche-Tard’s play for Carrefour

“First and foremost, I think we’re a retailer. That fact gets lost a little bit,” Couche-Tard chief executive Brian Hannasch said. “As we see the retail landscape changing, channels continue to blur at an even faster pace … We consider it important to look at related growth platforms and how we can add to our core capabilities.”

That management of the Laval, Que.-based company held a conference call to answer questions on Carrefour speaks to the extent of investor confusion that was hanging over a potential agreement. But the new details given about its thinking on growth underscores that Couche-Tard’s field of vision is much broader than previously believed and that this company will likely not be the same one in the years to come.

Shares of Couche-Tard, which means night owl in French, gained 1.1 per cent to close at $38.40 Monday on the Toronto Stock Exchange. The company controls the Circle K chain of convenience stores, with more than 14,000 retail locations in 26 countries.

Couche-Tard shocked stakeholders and observers last Tuesday when the company confirmed a Bloomberg News report it was in early stage discussions on a deal to take over Carrefour. By Friday the deal was dead, the victim of a French government that was blindsided and subsequently nixed the idea on the grounds that it would harm the security of the country’s food supply.

“What we had unfortunately was a leak that allowed this overnight to show up in the papers. And it caught all key stakeholders by surprise and put them quite honestly on the defensive,” Mr. Hannasch said in an interview. “[It] really cut off the opportunity for us to engage and share our plans.”

French political leaders were “a bit frustrated that we didn’t contact them in advance,” Couche-Tard founder and chairman Alain Bouchard said in the interview. He said normally Couche-Tard would engage political stakeholders after a letter of intent is signed between the companies, which hadn’t yet occurred in this case.

Couche-Tard had planned to meet with the French government a few days after that initial agreement was reached. In the end, Mr. Bouchard flew to Paris Thursday in a last-ditch effort to try to salvage the friendly deal.

Story continues below advertisement

The chairman went to the headquarters of the French Ministry of Finance and Economy, which extends over the Seine River in the city’s 12th arrondissement, and tried to make a case to Finance Minister Bruno Le Maire that included a commitment to preserve jobs and satisfy food-supply concerns. To no avail. The whole exercise was over in about 20 minutes, Mr. Bouchard said.

“It was a cordial discussion but very firm on his part,” Mr. Bouchard said. “We didn’t think, and Carrefour didn’t think, [food security] could be at risk. I mean they’re a retailer. We’re buying food from the locals.” The government was “probably concerned with the reaction of the farmers and the fishermen and others,” he said.

The COVID-19 pandemic appears to have heightened France’s watch over its retailers, Couche-Tard finance chief Claude Tessier said. After the sight of bare store shelves and global shortages of staples such as baby formula last year, “the government was probably expecting to be in the loop a bit sooner,” he said.

Couche-Tard respects France’s decision and would welcome the opportunity to re-engage the government in talks to demonstrate that a tie-up with Carrefour could be good for France and for consumers, Mr. Hannasch said. “We’ll see what happens but for now [the file is] definitively closed.”

Instead, the two companies said they will begin exploratory discussions on how they can collaborate on operations. That includes partnering on private-label development and evaluating ways to improve product distribution in markets where they overlap.

Quebec Economy Minister Pierre Fitzgibbon also spoke to Mr. Le Maire Friday to try to provide reassurance that Couche-Tard could be a good owner for Carrefour but his counterpart’s mind was “already made up,” Mr. Fitzgibbon said in an interview Monday. Still, he said he believes the seeds have now been planted for a potential future rapprochement.

Story continues below advertisement

The denouement marks the second major takeover attempt by Couche-Tard that has petered out in less than a year. Last April, the company suspended efforts to acquire Caltex Australia Ltd., now known as Ampol Ltd., saying the target’s business prospects had become clouded by the pandemic.

Couche-Tard hasn’t made a major acquisition since buying Texas-based CST Brands Inc. for US$4.4-billion in 2017. It was also in the running for Marathon Petroleum Corp.’s Speedway chain this past summer but bowed out after the price became too rich, losing the contest to Japan’s Seven & i Holdings Co.

Mr. Bouchard has turned Couche-Tard into one of the industry’s leading consolidators and the company has continued to expand its store count and revenue dramatically, doubling in size several times through acquisitions in the United States and Europe. In 2019, he set a goal to double net earnings again over five years. To get there, Couche-Tard has to increase sales of existing stores while making further acquisitions, Mr. Hannasch has said.

It’s in that context that Couche-Tard executives began analyzing the broader retail industry for takeover and partnership opportunities and looking at related sectors such as supermarkets, dollar stores and quick-service restaurants, Mr. Hannasch said. He said the company narrowed that analysis to two specific retail types into which it could expand, including grocery. He declined to name the other.

“Food is the common theme there across everything that we’ve looked at,” the CEO said, adding that the company has no plans to stop selling gasoline and is adding to its fuel-sourcing capability so new acquisitions would need to mesh with that as well.

The COVID-19 pandemic has crushed international travel but starting in November, 2020, Couche-Tard’s executives managed to visit five countries and about 500 retail outlets run by Carrefour and key rivals as they began their typical “on the ground” due diligence. They’re also actively working on other acquisition opportunities.

Story continues below advertisement

“This is not about ego. It’s not about being big for big’s sake,” Mr. Hannasch said. “We do think scale will matter. We think being able to be part of a customer’s life in an omni-channel way is going to be more important than ever in the future. But we’re going to do a deal if we think it’s something that brings value first and foremost.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies