Best bits: Carrefour to face tense shareholders

It's likely Carrefour CEO Lars Olofsson will be a little apprehensive as he heads off for work tomorrow (21 June).

In Paris tomorrow, the world's second-largest retailer will hold its annual shareholders meeting. It promises to be a tense occasion. It has been over two years since Olofsson became Carrefour's chief executive, a position he took amid concern over the French retailer's domestic business and with investors like billionaire Bernard Arnault said to be pushing for better returns for shareholders and having an active role in company strategy.

Despite Olofsson's attempts at revitalising Carrefour's French operations, little, it seems, has changed. On Friday, a day after the appointment of a new executive to lead Carrefour's domestic unit, the company admitted that its profits in France have slumped in the first half of the year after mistakes with promotions and fierce competition from the likes of E.Leclerc and Intermarché.

Two key moves to improve returns to shareholders - a spin off of Carrefour's discount business Dia and of 25% of its property unit - have proved controversial. Analysts have questioned the value that the two spin-offs would have for shareholders, Standard and Poor's cut Carrefour's credit rating amid concerns that the retailer's moves would limit its financial flexibility and the company's vice chairman was said to have resigned in protest at the spin-off proposals.

Carrefour said last month that it would delay the move to spin off 25% of its Carrefour Property unit but said it would press ahead with the plan for Dia. That proposal is expected to be passed, given the voting power that Arnault has in Carrefour through his Blue Capital venture (the company, which comprises the billionaire and US private-equity firm Colony Capital has 20% of the voting rights in the retailer).

However, the meeting is still likely to hear shareholder concerns about Carrefour's performance, particularly in France, where profits have slumped. Sanford Bernstein's Christopher Hogbin notes that Carrefour said some of the fall in profits is due to changes to employer taxes and, looking ahead, the analyst admits that the roll out of the Carrefour Planet format and cost cuts could help the retailer's profitability. However, he believes that these initiatives may not be enough to surmount the "structural pressures" that the company faces in its domestic market.

France was also the backdrop for one of the more notable M&A stories on just-food last week. UK-based R&R Ice Cream, already the second-largest ice cream manufacturer by supermarket sales across the Channel, confirmed it wanted to buy the ice cream division of Maison Boncolac, part of French dairy co-operative Alliance Agro Alimentaire, or 3A Coop.

The companies are still in talks but R&R chief executive James Lambert said an acquisition would bolster the company's position in France's own-label sector and expand its branded portfolio. Speaking to just-food in December, Lambert said R&R, which acquired French ice cream firm Rolland last year, would make more acquisitions in 2011 and it looks like the company has headed back to France for its first deal.

Elsewhere, the possibility that Nestle could be interested in acquiring Spanish milkshake-to-cookies maker Cacaolat also piqued your interest. Cacaolat is one of ten subsidiaries of bankrupt Spanish food company Nueva Rumasa that is up for sale and sources told just-food that the court handling the disposals has received interest in Cacaolat from Nestle - as well as another Spanish food group Nutrexpa, among others.

Two confirmed investments from Nestle were announced last week in more developing markets, with more money for its operations in Indonesia and the acquisition of Serbian food and drink maker Centroproizvod.

Could one of Nestle's next moves be in Spain, for all the country's economic problems?