The financial terms of the deal, which must be approved by anti-trust authorities, were not disclosed, Reuters said.
Auchan, which is present in 17 countries and makes 65 percent of revenue outside France, operates 11 hypermarkets in five Ukrainian cities and employs 3,600 people.
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Karavan (also spelled as Caravan) operates nine hypermarkets and superstores and employs 3,300 people in Ukraine. The deal will enable Auchan to beef up its presence in Kiev and expand to four new cities: Kharkiv, Dnipro, Zhytomyr and Chernivtsi.