Bloomberg News

Casino Increases Stake in Pao de Acucar After Merger Proposal

June 30, 2011

June 30 (Bloomberg) -- Casino Guichard-Perrachon SA raised its stake in Cia. Brasileira de Distribuicao Grupo Pao de Acucar to 43.1 percent after the Brazilian retailer proposed a merger with rival Carrefour SA in the South American country.

The Saint-Etienne, France-based grocer acquired 16.1 million preferred shares of Pao de Acucar, equivalent to a 6.2 percent stake, according to a letter received by Pao de Acucar and sent to Brazil’s securities regulator yesterday. The purchase doesn’t change control of Pao de Acucar by the holding company through which Casino and the Diniz Group share command of the Brazilian retailer, the letter said.

Brazilian billionaires Andre Esteves, the 42-year-old chief executive officer of Banco BTG Pactual SA, and Pao de Acucar Chairman Abilio Diniz, 74, are proposing to merge Carrefour’s Brazil assets with the local retailer. The deal, backed by an injection of as much as 2 billion euros ($2.9 billion) from a Brazilian state bank, may prevail over a 2005 accord that would give Casino control of Pao de Acucar in 2012.

Casino, which had a 37 percent stake in Pao de Acucar as of June 16, described the proposal as “hostile” and said the proposal is a “long-standing, illegal planned financial transaction.”

Diniz said yesterday in an interview with Brazil’s Globo TV that Pao de Acucar has done nothing illegal and that Casino must analyze the proposal “without emotion.”

Pao de Acucar rose as much as 12 percent in Sao Paulo trading yesterday, then fell to close 3.1 percent lower at 71.00 reais. Carrefour advanced 2.4 percent to 28.11 euros in Paris, while Casino gained 3.9 percent to 64.60 euros.

--Editor: Mike Millard.

To contact the reporter on this story: Helder Marinho in Sao Paulo at

To contact the editor responsible for this story: Francisco Marcelino at

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