Carrefour Not for Sale – For Now

Speculation has ended for now that Carrefour SA (Paris), the world’s second-largest retailer, is headed for a takeover.

French investor Bernard Arnault, the richest man in France (he owns 51 percent of LVMH Moët Hennessy Louis Vuitton), and Colony Capital LLC (Los Angeles) said they would not acquire more than 20 percent of Carrefour until June 30, 2008, unless Carrefour’s largest shareholder, the Halley family, decided to sell its 13 percent stake or a new shareholder bought more than 5 percent of the company.

Last month, Colony Capital and Arnault, together with a hedge fund, bought a 9.8 percent stake in Carrefour, igniting speculation that a takeover was imminent. That same day, Carrefour chairman Luc Vandevelde was dismissed.

Reliance Industries of India was reported to be considering a bid for the Halley family’s 13 percent stake. The family has retained HSBC and Lehman Brothers to advise it on what to do.

Also this week, Colony Capital and Arnault asked for two seats on Carrefour’s nonexecutive supervisory board, and the Halley family, which already has two seats on the seven-member board, asked for an additional seat of its own. Both requests have to be submitted to shareholders for approval, but Carrefour’s supervisory board appears to favor the board seat requests.

Carrefour (which means “crossroads” in French), was started in 1959 by Marcel Fournier and Louis Defforey, who came up with the hypermarket concept. In 1961, Paul-Auguste Halley, a grocer in Cherbourg, France, and his sons formed the Promodès supermarket chain and also began building big-box stores. In 1996, the French government pushed through a law strictly limiting the expansion of large retailers by locking them into their current real estate. Promodès and Carrefour merged in 1999 with the Halley family the new company’s biggest shareholder. Paul-Auguste Halley died in 2003, in a plane crash.