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Jan 14, 2021

Billionaire Arnault would take hit from sale of Carrefour stake

French government buys room for maneuver on Couche-Tard's Carrefour deal

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Billionaire Bernard Arnault’s investment vehicle would take a hit if French grocer Carrefour SA’s purchase by Canada’s Alimentation Couche-Tard Inc. goes through.

Arnault, coming up for air after completing LVMH’s US$16 billion takeover of Tiffany & Co., is contending with the new mega trans-Atlantic deal -- this time involving the sale of a 5.5 per cent stake in Carrefour held by Groupe Arnault.

While the deal has stalled after the French government signaled its initial opposition to the US$20 billion bid, if it’s revived, Arnault faces an offer price that’s less than half of where Carrefour shares were trading when he invested in the company.

Couche-Tard is offering 20 euros a share for Carrefour. The French supermarket chain’s stock traded at 47 euros on average in March 2007, when Groupe Arnault bought shares. At market price, that valued his holding at about 1.5 billion euros (US$1.8 billion). Couche-Tard is offering 900 million euros for the investment group’s stake.

Couche-Tard’s bid represented a roughly 29 per cent premium to Carrefour’s closing price Tuesday, when Bloomberg first reported the deal. The offer price could rise with the companies seeing room to negotiate further, according to people with knowledge of the matter.

Billionaire Holders

Arnault’s is one of two French billionaire families invested in Carrefour, with the other being the Moulins, the founders of the department store group Galeries Lafayette. Brazil’s Abilio Diniz is yet another of the so-called anchor shareholders of Carrefour.

The three shareholders may be supportive of the deal as long as the price remains above 20 euros and is mostly paid in cash, “despite the fact that they would remain loss-making given their very high entry points,” said Clement Genelot, an analyst with Bryan, Garnier & Co.

Through its vehicle called Motier, the Moulin family is the biggest shareholder in Carrefour, with a 9.8 per cent stake. It invested in the company in April 2014, when the share price averaged 29 euros. Arnault’s group is the third-largest shareholder of Carrefour, behind the Moulin family and Peninsula, Diniz’s investment group, which held a 7.61 per cent stake as of Dec. 31, 2019.

Representatives for Groupe Arnault, Galeries Lafayette and Diniz declined to comment on their Carrefour holdings.

Arnault’s son, Alexandre, has been on Carrefour’s board since April 2019 while a close lieutenant, Nicolas Bazire, has been on the board for at least 12 years. Galeries Lafayette Executive Chairman Philippe Houze, the son-in-law of Ginette Moulin -- who is the billionaire grand-daughter of the founder of the department store chain -- joined the board in June 2015. Diniz was appointed to the body in May 2016.

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