French retailer Carrefour has reached an agreement with Louis Delhaize Group to acquire the Cora and Match banners in France, reaffirming its leadership in the French food retail market.
Cora and Match operate 60 hypermarkets and 115 supermarkets respectively, and employ nearly 24,000 people in France. They generated pre-tax sales of €5.2 billion in 2022 (€4.3 billion excluding petrol), with EBITDA of €189 million. The shops acquired are highly complementary to Carrefour's geographically, with particularly high market shares in the Grand Est and Nord regions of France, where Carrefour has little presence. The transaction involves the acquisition of 55 hypermarkets and 77 supermarkets.
The transaction, which is expected to be completed in the summer of 2024, values the acquired assets at €1.05 billion and will be accretive to the Group's adjusted earnings per share from the first year.
The integration of the Cora and Match shops offers significant potential synergies, estimated at €110m of EBITDA on an annual basis 3 years after the effective completion of the transaction. The associated integration costs, spread over 2 years, are estimated at €200m (investments and operating expenses).
At the same time, Carmila, in which Carrefour holds a 36% stake, has reached an agreement with the Louis Delhaize group to acquire their 93% stake in Galimmo, which owns 52 shopping arcades adjacent to Cora shops.
Alexandre Bompard, Chairman and CEO of the Carrefour Group, said: "with the acquisition of the Cora and Match banners, Carrefour announces its first major acquisition in France for over twenty years and consolidates its leadership in food retailing in its domestic market. This friendly transaction will enable Carrefour to continue the adventure begun in France by the Bouriez family and the Louis Delhaize group, with which our Group shares a common culture, history and values. I would like to pay tribute to them, as well as to the Cora and Match teams, whose expertise, commitment and entrepreneurial culture will be an asset for our Group. This transaction also demonstrates our ability to pursue our external growth strategy through targeted acquisitions that will generate market share and synergies, thanks to the transformation undertaken 6 years ago and the strength of our balance sheet. The Carrefour Group will be able to contribute a powerful commercial and operational model, which is highly complementary to the expertise of Cora and Match, thanks to its own brand, digital acceleration and its raison d'être, the food transition for all."
The Carrefour and Louis Delhaize groups are long-standing partners with strong historical and cultural links: the first Cora shop, opened in Garges-lès-Gonesses in 1966, was one of the first Carrefour franchises. More recently, Carrefour and Cora have joined forces in purchasing. Finally, on 27 April this year, Carrefour announced the takeover of Cora's operations in Romania, which should be completed by the end of 2023.
The acquisition of Cora and Match will enable the Group to reaffirm its leadership in the French market, at a time when external growth opportunities for quality assets are rare. The Cora and Match shop networks have excellent locations and complement Carrefour's in terms of geography. Under the impetus of Louis Delhaize Group, Cora and Match have developed recognised operational expertise and concepts. These shops will benefit from all the strengths of the Carrefour Group, in particular a dynamic of constant market share gains for more than two years, leading brands, a recognised range of Carrefour-branded products, proven operational excellence in terms of pricing and promotions, and a strong presence in e-commerce, both Click & Collect and home delivery. These factors have enabled Carrefour to significantly improve its commercial dynamic and the profitability of its activities in France over the last 6 years, particularly in hypermarkets. In addition, the acquired shops will take part in the implementation of the strategic initiatives of the Carrefour 2026 plan and will benefit in particular from the "Maxi" competitiveness and productivity method.
Combining the respective strengths of Carrefour, Cora and Match will create significant value, with estimated annual synergies of €110 million in EBITDA, 3 years after the transaction is completed.
Half of these synergies will be linked to optimising commercial performance: developing omnichannel, optimising non-food business, increasing the weight of the own brand, logistics and purchasing synergies.
The other half will come from the pooling of distribution costs, including non-retail purchases and marketing and advertising expenditure.
Structure of the transaction
The acquisition will be 100% cash, based on an enterprise value of €1.05bn, reflecting a post synergies EV/EBITDA acquisition multiple of around 4.2x, a highly accretive multiple based on the current valuation of the Carrefour Group.