(Bloomberg) -- French grocer Auchan made a recent approach to acquire rival Carrefour SA but talks to create the country’s market leader stalled over price, according to people familiar with the matter.
Auchan had approached Carrefour about a combination that would have seen Auchan, which is owned by the Mulliez family, hold a majority stake in the combined entity, the people said.
However, talks were halted over disagreements among shareholders in both companies on the valuation and structure of a deal, said the people, who asked not to be identified because discussions are private.
It is unclear whether discussions will be revived, the people said. Representatives for Auchan and Carrefour declined to comment.
Speculation has been ripe about consolidation among French grocers. Carrefour held talks with Auchan earlier this year about a possible tie-up, Le Monde reported last month.
The Mulliez family told a local newspaper earlier this month that they “will never sell Auchan,” somewhat dampening speculation. However, the current talks foresee the company as the buyer, not the seller, in any deal with Carrefour, the people said this week.
Read more: Carrefour Analysts Give Thumbs Down to Mooted Auchan Tie-Up
A mooted tie-up has had varied responses from analysts. A merger would increase exposure to hypermarkets as well as a larger presence in complex markets such as Russia and could face antitrust or political hurdles. On the other hand, it could generate significant cost and buyer synergies, analysts wrote last month.
Carrefour has been seen as a potential dealmaker since the French government in January blocked an attempted $20 billion takeover by Canada’s Alimentation Couche-Tard Inc.
Carrefour shares are currently trading at 16.03 euros, valuing the company at 12.6 billion euros, below the 20 euro-per share offer from Couche-Tard at the time.
A Canadian-French merger would have created a retail powerhouse, combining Couche-Tard’s North America-focused network of 14,200 convenience stores with Carrefour’s sizable European operations, which include hypermarkets and smaller outlets. It could also have ranked as one of the biggest-ever takeovers of a French company by a foreign entity.
A tie-up between two the French players Auchan and Carrefour might be more politically palatable, though issues such as job cuts could be controversial ahead of a closely watched April presidential election.
Takeover activity in Europe’s supermarket sector has been heating up.
Over the summer, a private equity bidding war erupted for U.K. grocer Wm Morrison Supermarkets Plc. A deal was settled at an auction earlier this month when Clayton Dubilier & Rice LLC finally beat out a Fortress Investment Group-led consortium with a winning 7 billion-pound ($9.5 billion) bid for Morrison.
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