Casino – the fourth-largest grocer in the country – said it had been contacted by Carrefour, the second-largest player, in recent days over a possible tie-up, but noted regulatory hurdles to any such deal given their market strength.
In a statement, Casino said its board of directors had met on Sunday and “unanimously decided to reject Carrefour’s approach”.
“The board unanimously reiterated its entire confidence in Casino’s strategy for value creation based on its unique market positioning,” Casino said.
Carrefour denied making an approach, saying it was surprised Casino’s board could have considered “a merger proposal that does not exist”.
It suggested some form of mischief had taken place when it added: “The difficulties faced by Casino and its controlling shareholder (do) not justify untimely, misleading and groundless communications,” Carrefour added.
Casino shares have lost nearly a third of their value in the year to date amid investor concerns over debts facing the chain and parent company Rallye.
Rallye, through which chief executive and majority shareholder Jean-Charles Naouri controls Casino, needs to repay over €600m (£538m) worth of bonds in October and a further €300m (£269m) worth in March.
It recently secured a new banking facility with a €500m (£448m) credit line.