CANADA – French retail chain Carrefour SA and its Canadian counterpart Alimentation Couche-Tard Inc. have abandoned talks on a proposed US$20 billion merger following stiff opposition from the French finance minister.

The companies said they will look instead at forming a looser alliance that will see them work together on fuel purchases, branding and distribution where their networks overlap.

“The opportunity for operational partnerships with Carrefour will further our journey towards becoming a leading global retailer,” said Brian Hannasch, president and chief executive officer of Couche-Tard.

A 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.

The decision to stop the merger negotiations comes after top executives of the Quebec-based company flew to Paris to offer the government several sweeteners.

On the executives bag of goodies was billions of euros of investment in Carrefour stores, no job cuts for at least two years and dual stock listings in France and Canada.

They however failed to persuade Finance Minister Bruno Le Maire, who told executives in a private meeting Friday he was standing by his position that a takeover would be bad for France.

Earlier that day, Le Maire had said on BFM TV: “To sum up: it’s a no. A courteous no, but a no that is clear and definitive.”

Le Maire had cited concerns about a French supermarket chain falling into foreign hands, saying the country needs to maintain domestic control over its food supply.

The Covid-19 crisis has added impetus to that argument, and France recently bulked up its authority to block foreign takeovers.

Government officials in Canada tried to press the case. Quebec Economy Minister Pierre Fitzgibbon emphasized the close links between the French-speaking province and France, including deals that have gone the other way.

Last year, Alstom SA agreed to buy the rail unit of Bombardier Inc., and Airbus SE is the majority owner — in partnership with the Quebec government — of a commercial jet program that was originally developed by Bombardier.

The takeover of Carrefour by a foreign firm is however politically sensitive as the French retailers employs about 100,000 people in France and is the country’s largest private employer.

Couche-Tar’s acquisition could have however been a sound business decision as the Canadian firm “could be a very strategic shareholder that would benefit Carrefour’s operations in France.

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