Big news yesterday: Couche-Tard could buy hypermarket giant Carrefour.
Some people are thrilled, others are worried. Well, most people seem worried given the fact that Couche-Tard was down by more than 10% today.
I'm a bit of both. I don't know Carrefour that much. I've only been in one of their stores, while I was in China, three years ago. I only remember that it was huge. But, was it because it was in Shanghai and everything is huge there? I don't know.
Here's a list of pros and cons about the acquisition. Please, feel free to use the comment sections to add your thoughts about it.
Couche-Tard would be much less exposed to electric cars;
It would be a huge international expansion;
Carrefour is very cheap (PE ratio between 8 and 9), even fraudulent companies are more expensive than that;
Interest rates have never been so low, which is excellent when you need billions of dollars;
Couche-Tard has a great track record related to acquisitions.
There may be synergies (I'm not sure about that...)
Different culture (Carrefour is a french company that operates mainly in Europe and Asia);
It would be a very big acquisition (more than 28 billion euros (not dollars) including debt);
Decreasing revenues over the last 10 years;
Maybe french governement will do something to stop the acquisition.
I'll need a little more time, but to me, it looks like Couche-Tard wants to make us forget the fact that electric cars are coming and represent a big threat for their business model. While Couche-Tard is great for acquisitions and improving a struggling business, this time, they'll have to swallow a gigantic bite (which is not a bite actually, it's more like a blue whale) that has been struggling for years in a sector that isn't the historical strength of Couche-Tard.
At first glance, I think there's a lot of risks there.
I don't know if I'll keep my shares. I'll think a bit more about it.
Please, help me make my mind. I feel so alone.