Macron: a banker to gain connections, a politician to get re-election
If a yoghurt maker can be protected in the name of ‘economic patriotism’ in France, then it seems the same logic can be applied to defend the place where that yoghurt is sold.
That’s DD’s takeaway after Canadian petrol station operator Couche-Tard walked away from a €16.2bn bid to buy France’s dominant retailer Carrefour.
The shortlived affair, which ran into serious problems once France’s finance minister Bruno Le Maire declared his opposition to the deal, has not left any of the parties involved looking too good.
It has also rekindled memories of France’s sometimes wild interventions into global dealmaking.
Recall that for over 15 years, France has been trying to shake off its reputation as a country hostile to foreign acquirers ever since its prime minister vowed to protect Danone from a rumoured bid from PepsiCo (back in 2005, then French prime minister Dominique de Villepin said that the food multinational was one of the country’s industrial “jewels”).
Since then, a number of cross-border deals for French companies including steelmaker Arcelor, telecom gear specialist Alcatel-Lucent, cement giant Lafarge, and energy group Technip have been executed successfully.
“How can you tell me France is investor-friendly and go and do something like this?” one person involved in the deal told the FT’s Leila Abboud in Paris. “Protectionism may be politically popular but it is bad for the country in the long run.”
This time around, though, the irony is that the country is now run by a politician who spent several formative years striking deals in the Paris office of advisory firm Rothschild & Co. But what Couche-Tard seemingly failed to calculate is that Emmanuel Macron is a politician with huge ambitions.
His time at Rothschild was intended to ingratiate him in the world of the rich and powerful. One source recalled that Macron didn’t even know what ‘ebitda’ was back when he started at the firm in a senior position, before ascending to even greater heights.
The mooted takeover of Carrefour, the country’s largest private-sector employer, would have played out dangerously for Macron, as he prepares for a re-election campaign.
Now, dealmakers are left to ponder whether blocking a friendly Canadian bid into the French market was driven primarily by political calculations (and thus whether that stance will shift once elections are over), or whether there has been a narrowing in the sorts of assets that foreign bidders can attempt to buy.
Couche-Tard chief Brian Hannasch on Monday blamed the pandemic and fears over food security for the French government’s reaction. He also suggested that if the government changed its tune the Canadian company would be open to re-engaging.
In the short-term, none of this is much comfort to shareholders in Carrefour, whose fortunes continue to wane relative to its international competitors.
One Parisian banker offers an alternative view that brings the whole episode closed circle: “If you let Carrefour go, then the next one to fall is Danone.”
Speaking of which, on Monday, Leila reported an activist investor has called for Danone’s chairman and chief executive Emmanuel Faber to be replaced because of its “disappointing” share price performance.