Tycoon Diniz in talks to buy part of Carrefour's Brazil unit

December 17
10:31 PM 2014

Brazilian tycoon Abilio Diniz is in talks with Carrefour SA about buying a stake in the French retailer's Brazilian unit, a source with direct knowledge of the situation said on Wednesday.

According to the source, who requested anonymity because the talks remain private, Carrefour sees a private placement as a more feasible alternative now than an initial public offering for the unit, Brazil's No. 2 retailer. Diniz is interested in buying 10 percent to 15 percent of the unit, the source added.

Diniz, who stepped down last year as chairman of Carrefour arch rival GPA SA after significantly cutting his stake, teamed up with buyout firm Tarpon Investimentos SA in a recent purchase of a stake of up to 6 percent in Carrefour. Talks between Carrefour and Diniz are "at a very advanced stage", the source added.

While the structure of the deal is still under discussion, Diniz, 77, could obtain "management rights," or the power to help manage the unit, which includes a network of supermarkets and Atacadão, Carrefour's cash-and-carry wholesale unit, the source said.

Península Participações, the firm running the investments of Diniz and his family, declined to comment. A Carrefour spokesperson declined to comment on "market speculation."

A deal with Carrefour would mark Diniz's return to retailing. The eldest son of GPA's founder, he left the company in September last year to turn around BRF SA, a Brazilian processed foods company that is the world's No. 1 poultry producer.

Diniz fell out with Casino Guichard Perrachon & Cie, his partner at GPA, after he initiated merger talks with Carrefour in 2011. Had those talks prospered, Carrefour would have obtained a stake in GPA just as Casino, which had not approved of such a deal, was preparing to take control of GPA under a previous shareholder agreement with Diniz.

According to the source, proceeds from a deal with Diniz would help Carrefour take on GPA in Brazil's competitive retail market. Still, Carrefour has not ruled out an IPO for the Brazilian unit, and Diniz's involvement in the business as an anchor investor could "contribute greatly to that plan in terms of visibility," the source said.

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