An Important Juncture
As a member of the Halley family and the chairman of one of the top French retailers, Promodes, Paul-Louis Halley witnesses the $16.6 billion takeover of his family’s firm by its long time competitor Carrefour, on January 25th, 2000. This merger, prompted by growing threats from foreign retailers, will establish Carrefour as the top European retailer. Although these two firms have a long history of rivalry and competition, this move would be the obvious choice. Despite having put aside their differences, “the marriage was clearly an externally driven affair.” (4) Months earlier, in June of 1999, Wal-mart expanded its european holdings with a $10 billion investment used to take over ASDA of Britain. The two french retailers, having themselves nearly been targeted for acquisition by Wal-mart in recent years, are very much aware of the growing threat that the world’s top retailer poses, especially in light of prior competition with the mega corporation throughout previous decades.
Analysts have predicted that such a merger would take place between two major European retailers. To do so is to increase economies of scale for the newly merged. With a swap of 6 Carrefour shares for each of Promodes’, a total stock market value of 49 billion euro has been achieved, which despite still being much smaller than Wal-mart’s $200 billion (1), may be enough to hold the American retailer off, as Carrefour still controls a greater portion of the local market.
Although the merger with Carrefour seemed inevitable at this point in order to save the two mega retailers from the growing threat of Walmart, the Halley family would no longer be running the Promodes show. Paul-Louis Halley, caught in a moment of reflection, must wonder if this could have been prevented at a pivotal moment in the firms development, or if happenstance had all but guaranteed