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Tesco and Carrefour will not renew their purchasing alliance
7th Jun 2021 09:16
(Sharecast News) - French supermarket group Carrefour and UK retailer Tesco announced on Monday that they would not extend their purchasing alliance.
In a joint statement, the two companies said that they had "decided not to extend their purchasing alliance beyond the three-year operational framework agreed in 2018".
Both companies added that they "benefited from a number of joint buying opportunities". However, "both companies have agreed that they will continue this work independently and focus on their own opportunities, building on the experience and the progress made during the alliance period".
The alliance, which was agreed so as to provide greater choice and lower prices to customers, was set to last until the end of 2021.
According to Shore Capital Markets analyst Clive Bank, "for whatever reason, regulatory, cultural, and operational, there would appear to be little notable benefit from the alliance on an ongoing basis."
Black had questioned whether he would ever be able to find evidence the benefits of the alliance on the two companies' financial statements as far back as 2018.
"Whilst all this is so, it will remain an open question, and no doubt one that M&A bankers will be repeatedly exploring, as to whether Carrefour and Tesco could ever more formally merge to the benefit of more than the advisory teams.
"Their respective categories and geographies remain very complementary, especially given Tesco's retrenchment over the past decade, with the British Isles remaining an efficient and substantial market of approaching 70m shoppers," Clive Black said.
Tesco's shares were up 0.5% at 226p on Monday morning.
In a joint statement, the two companies said that they had "decided not to extend their purchasing alliance beyond the three-year operational framework agreed in 2018".
Both companies added that they "benefited from a number of joint buying opportunities". However, "both companies have agreed that they will continue this work independently and focus on their own opportunities, building on the experience and the progress made during the alliance period".
The alliance, which was agreed so as to provide greater choice and lower prices to customers, was set to last until the end of 2021.
According to Shore Capital Markets analyst Clive Bank, "for whatever reason, regulatory, cultural, and operational, there would appear to be little notable benefit from the alliance on an ongoing basis."
Black had questioned whether he would ever be able to find evidence the benefits of the alliance on the two companies' financial statements as far back as 2018.
"Whilst all this is so, it will remain an open question, and no doubt one that M&A bankers will be repeatedly exploring, as to whether Carrefour and Tesco could ever more formally merge to the benefit of more than the advisory teams.
"Their respective categories and geographies remain very complementary, especially given Tesco's retrenchment over the past decade, with the British Isles remaining an efficient and substantial market of approaching 70m shoppers," Clive Black said.
Tesco's shares were up 0.5% at 226p on Monday morning.