France's Auchan held talks with Niel-backed SPAC before failed Carrefour bid - sources

Teract SA

12/10/2021 16:56

By Pamela Barbaglia and Gwénaëlle Barzic
    LONDON, Oct 12 (Reuters) - French food retailer Auchan
explored a deal with a blank cheque company backed by telecoms
mogul Xavier Niel and banker Matthieu Pigasse before a failed
attempt to tie up with rival Carrefour, three sources familiar
with the matter told Reuters.
    Discussions between the billionaire Mulliez family, which
owns Auchan, and 2MX Organic  2MX.PA  - which was launched in
December and pioneered Europe's market for special acquisition
companies (SPACs) - were held over the summer, the sources said.
    A tie-up would have given Auchan a listing, providing a
currency to do deals and generate funds to revamp its
hypermarket-focused business. But it would have been a leap for
2MX Organic, which raised money from investors pledging to build
a European champion in organic food.
    The talks failed to progress, however, as Auchan pursued an
industry tie-up with Carrefour that could have generated cost
savings and buying synergies, the sources said, speaking on
condition of anonymity as the matter is confidential.
    Auchan's move to combine with Carrefour  CARR.PA  and create
a French market leader with 110 billion euros ($127 billion) of
sales per year was called off in early October, leaving the firm
empty-handed as talks with 2MX Organic are no longer active, the
sources said.  urn:newsml:reuters.com:*:nL8N2R70ZN
    A spokesman for Auchan denied discussions with 2MX Organic,
adding the company was not for sale.
    2MX Organic declined to comment.
    Shares in 2MX Organic, which is also backed by entrepreneur
Moez-Alexandre Zouari, spiked on their market debut on Dec. 9,
making it France's biggest IPO in 2020.
    Dubbed by its owners "the Tesla of responsible consumption",
2MX Organic has been looking for a merger candidate since the
start of the year, the sources said, but has struggled to find a
suitable target amid waning market interest in SPACs due to a
regulatory crackdown https://www.reuters.com/legal/legalindustry/caution-ahead-spac-litigation-trends-provide-road-map-directors-officers-2021-09-02
 in the United States.
    The sources said talks with Auchan were not resumed after
the Carrefour debacle, with one adding 2MX Organic was now
working on another project.
    SPACs raise money on stock markets with the promise of
buying private companies and helping them grow. But investor
interest has waned after some poor performances and a rising
number of class-action lawsuits as more deals have turned into
flops.  urn:newsml:reuters.com:*:nL8N2QJ2Z0
    "SPAC sponsors are getting desperate to find a target and
have started looking at deals that they would have never
considered before," one of the sources said. "Some are trying to
rejig their core focus to be able to fulfil their mission."
    In the third quarter, only 85 SPACs listed globally, raising
$14 billion, down from 309 that raised $95 billion in the first
quarter, according to Refinitiv data.
    Many SPACs have seen their shares fall so heavily they now
trade below the $10 at which they were originally priced.
    ($1 = 0.8661 euros)

 (Reporting by Pamela Barbaglia and Gwenaelle Barzic Additional
reporting by Dominique Vidalon
Editing by Mark Potter)
 ((pamela.barbaglia@thomsonreuters.com;  +442075427723; Reuters
Messaging: pamela.barbaglia.thomsonreuters.com@reuters.net))