Circle K Parent Eyes Carrefour in Multiformat Merger

In a business proposal with the potential to trigger worldwide retail ripples, the Canadian owner of the Circle K convenience chain has made an exploratory offer to acquire French hypermarket giant Carrefour.

Alimentation Couche-Tard Inc., based in Quebec, said in a press statement this week it had submitted a nonbinding 20-euro-per-share offer to Carrefour SA, calling for “friendly combination” that values the French retailer at about $20 billion. Couche-Tard said those terms were under discussion and remain subject to due diligence. There is no certainty the talks could lead to a merger.

Carrefour operates more than 12,000 stores, primarily supermarkets, hypermarkets and small food stores, in more than 30 countries. It offered a very brief statement confirming it was in receipt of Couche-Tard’s solicitation. “Discussions are very preliminary,” it said.

While a business combination between those retailers would have immediate impacts in Europe—where both companies operate thousands of units—it would mark the potential for disruption worldwide as Circle K has a significant U.S. presence and could learn plenty about grocery from Carrefour, which operates more than 2,800 supermarkets, including fleets of innovative small food stores.

Carrefour had a brief fling with U.S. retail expansion, building two U.S. hypermarkets under its own brand in the 1980s, but both were closed by 1993.

The offer also demonstrates that Couche-Tard is not limiting itself to convenience and gas formats as it eyes growth. It has traditionally been an acquisitive company, buying into the U.S. through the Circle K acquisition in 2003. It operates more than 7,100 retail stores in the U.S. under the Circle K and Holiday Station banners.