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French food giants battle over Brazil’s number one retailer

Thursday, June 30th 2011 - 21:07 UTC
Full article 2 comments
Grupo Pao de Acucar controls a 27% of Brazil’s retail market share Grupo Pao de Acucar controls a 27% of Brazil’s retail market share

Two French food giants are locked in a battle to take over Brazil's number one retailer, Grupo Pao de Acucar. Proposals to merge Pao de Acucar with the local operations of Carrefour are opposed by rival Casino, which already has a stake in the Brazilian group.

The proposed Pao de Acucar-Carrefour deal would create a firm with a 27% market share and sales of more than 40bn US dollars a year. Pao de Acucar is already Latin America's second-biggest retailer.

As well as its Pao de Acucar and Extra supermarket chains, it also has a majority stake in the Ponto Frio and Casas Bahia chains that sell electrical goods and furniture.

Pao de Acucar's shares rose 12.6% on Brazil's main stock exchange on Tuesday after news of the deal emerged.

Brazilian investment fund Gama announced the merger plan on Tuesday. Under the terms of the offer, it will combine Pao de Acucar and Carrefour's Brazilian assets into a new company, to be called Nova Pao de Acucar.

Gama said investment fund BTG Pactual and the BNDES state development bank had committed 2.8bn to the deal, as well as 710m in debt financing.

The deal followed talks between Carrefour and Pao de Acucar chairman Abilio Diniz, whose family founded the firm in Sao Paulo in 1948. Since 1999, Pao de Acucar has been part-owned by another French firm, Casino, which denounced the proposal to merge with Carrefour as “illegal”.

Casino said it was disappointed with Mr Diniz for negotiating a deal without its authorisation.

Categories: Economy, Investments, Brazil.
Tags: Brazil.

Top Comments

Disclaimer & comment rules
  • briton

    As we have said before,
    she is young growing and ripe for picking.
    And she is well fought over, lucky brazil.

    Jun 30th, 2011 - 11:21 pm 0
  • GeoffWard2

    If the French food firm Casino is part-owner of Pao de Sucre, how come the PdS-C deal is being done behind Casino's back?

    And why is BNDES underwriting it to the tune of BILLIONS of Reais of public (Brasilian taxpayeer's) money?

    For 12% of annual worldwide shareholder dividend handouts to BNDES/Brasilian Government.

    OK, it helps 'world growth' of a 'Brasilian' company, but it also means progressive, creeping nationalisation of all the big and successful private Brasilian companies in Brasil.
    [Thinks: But can you blame them, it works for the Chinese!]

    BNDES was created to help
    the little guys become middle-sized guys, and
    the middle-sized guys to become big guys
    - not to help the super-rich national guys become even more super-rich world guys.

    But buying into the super-rich with The People's Money allows
    'a little bit here,
    a little bit there,
    and a little bit somewhere else'
    and, all of a sudden, a shed-load of 'politicians' get very rich indeed.

    Jul 01st, 2011 - 04:32 pm 0
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