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Carrefour

Carrefour vs. Wal-mart: The Battle for Global Retail Dominance
“La Commission Européenne autorise la fusion CARREFOUR-PROMODES qui donne naissance au 2éme distributeur mondial.”1 The words virtually screamed across the screen of Carrefour’s webpage on January 25, 2000 as the European Commission finally ruled on Carrefour’s friendly US$16.6 billion takeover bid for its rival Promodes. Only one year after winning the Soccer World Cup, France was offering Europe another champion. With around 9,000 stores in 21 countries and combined net sales of US$49.2 billion, the new Carrefour was Europe’s top retailer, vaulting over Germany’s Metro AG, the continent’s former number one (Exhibit 1 provides a list of the top European retailers). The bid took analysts by surprise as Carrefour and Promodes, the fifth and seventh largest European retailers respectively, were better known for their long history of vigorous rivalry. The deal was seen by many as a defensive move by the French retailing establishment after the world’s largest retailer, Wal-mart, boosted its presence in Europe with a US$10 billion take-over of Britain’s ASDA in June 1999 (Exhibit 2 provides a brief description of world’s top grocery retailers). The marriage was clearly an externally driven affair. “I am convinced that if we had not moved, somebody else would have it done for us,” declared Luc Vandevelde, Promodes’ CEO. Wal-mart discretely entered the European market in 1997 through the acquisition of 21 warehouses from the German chain Wertkauf GmbH. In 1998 it acquired a further 74 warehouses from Spar Handels AG. But it was only after the acquisition of ASDA that French retailers took the American threat seriously. When Wal-mart started approaching top French retailers looking about for potential acquisition opportunities, including, interestingly, both Carrefour and Promodes, French retailers soon began to recognize that their world had changed dramatically and they needed to adjust their strategies...