Bloomberg News

Casino Seeks Brazil Chairman Ouster as Feud Escalates

February 20, 2013

Casino Seeks Brazil Chairman Ouster as Diniz Feud Heats Up

An employee arranges fresh vegetables for sale in a Casino Guichard-Perrachon SA supermarket in Paris. Photographer: Fabrice Dimier/Bloomberg

Casino Guichard-Perrachon SA asked Abilio Diniz to step down as chairman of its Brazilian unit, Cia. Brasileira de Distribuicao Grupo Pao de Acucar SA, after the billionaire expressed interest in joining the board of one of the retailers’s top suppliers.

In a letter presented at a meeting of Pao de Acucar shareholders today in Sao Paulo, Casino said the posting would cause an “obvious conflict of interest” and “distrust” among

board members. Diniz, 76, was in talks to become chairman of processed-food maker BRF-Brasil Foods SA, three people familiar with the matter said this month.

The move escalates a feud between Saint-Etienne, France- based Casino and Diniz, whose father founded supermarket chain Pao de Acucar as a bakery in 1948. The two sides have been fighting publicly since Diniz unsuccessfully tried to undo an agreement to cede control of Pao de Acucar, Brazil’s largest retailer, to Casino by proposing instead a merger with Carrefour SA local assets.

“Diniz’s behavior since Casino took over control in mid-2012 has created turbulence, ignoring the interests of the company,” according to the letter signed by Pao de Acucar’s parent company, Wilkes Participacoes SA, which is controlled by Casino. “Should he be named to BRF’s board or maintain an interest or influential position in that company, Diniz should immediately step down from his position as a board member at Pao de Acucar.”

Client and Competitor

Pao de Acucar is one of Brasil Foods’ largest clients, and the two companies also produce some competing products.

Diniz in an e-mailed statement denied that there would be a conflict of interest caused by the two appointments.

He said the same concerns can be raised about Casino Chief Executive Officer Jean-Charles Naouri, who also sits on Pao de Acucar’s board. Casino is a supplier of the Brazilian company.

“Casino intends to use my possible election to BRF’s board as a pretext -- a ruse -- to try to remove me from Pao de Acucar’s board,” Diniz said in the statement. “The shareholders’ agreement states that I am entitled to the lifetime post of chairman.”

Stake Sale

Diniz sold 1.5 billion reais ($764 million) of Pao de Acucar shares on Jan. 11 and bought 1 billion reais of Brasil Foods, said a person with direct knowledge who asked not to be named because the numbers aren’t public.

Casino said in an e-mailed statement that Diniz is putting his personal interests above Pao de Acucar’s. Pao de Acucar’s press office in Sao Paulo declined to comment, as did Brasil Foods.

Pao de Acucar rose 0.7 percent in Sao Paulo trading to 96.98 reais as of 2:48 p.m., bringing its gain in the past 12 months to 22 percent. Brasil Foods, based in Sao Paulo, rose 0.3 percent to 42.35 reais, putting the 12-month gain at 18 percent. That compares with a 14 percent drop for Brazil’s benchmark Bovespa index.

To contact the reporters on this story: Jessica Brice in Sao Paulo at jbrice1@bloomberg.net; Helder Marinho in Sao Paulo at hmarinho@bloomberg.net

To contact the editor responsible for this story: Adriana Arai at aarai1@bloomberg.net


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