French group Casino, shareholder in Brazil's largest retailer Pão de Açúcar, increased its total stake in the South American company to 43,1%, intensifying its battle for control of the Brazilian retail market. “Through this significant increase in participation, the Group reaffirms its presence and commitment in Brazil,” Casino commented today.
The securities purchased are 16,14 million preferred shares, which represent 6,2% of the total capital. This brings Casino to a total of 32,9 million preferred shares, a 12,7% stake in the Brazilian company. However, the shares do not have voting rights and do not change the control of CBD Pão de Açúcar, which is exercised jointly by Casino and the Diniz family, through the Wilkes Participacoes holding company. Counting the direct and indirect shares in the South American distribution company, Casino now owns 43,1% of the total capital of Pão de Açúcar.
In early June, the president of Pão de Açúcar, Abilio Diniz, had tried, behind Casino's back, to conclude a 14 billion dollar agreement which envisaged the merger of Pão de Açúcar with Carrefour, Casino's historical rival (see FIRSTonline article). The Brazilian had violated the terms of the partnership with Casino and had planned to create a new company in which Carrefour, the Basilian national development bank (Bndes) and the investment bank Btg Pactual, Diniz himself but also Casino would have been the major shareholders . "I hope that Casino will analyze the proposal with care and attention without bringing up feelings, in order to appreciate its merits," said the Brazilian businessman. “The benefits of this agreement are enormous for everyone,” he added.
But not only Casino, even the local opposition parties have emitted cries of scandal in Brasilia. They are against the fact that a public interest bank like Bndes could contribute up to 2 billion euros to subsidize the merger which would benefit a businessman like Diniz.
The Brazilian Minister of Development and Foreign Trade, Fernando Pimentel, instead attacked the banks. “Everything would be resolved if Brazil's private financial sector carried out its task, which is to finance the capital of our country – he said -. Since he doesn't do it, the Bndes is forced to intervene".
Diniz replied that “the Bndes is avoiding a supply system that is falling entirely into foreign hands. The bank is providing a service to consumers, to society and to all Brazilians.”
The Brazilian market, one of the countries with the highest growth rates in the world, appeals to everyone. The battle fought by Casino is just one of many we will see for the conquest of that appetizing territory.
