New York City -- Multiple reports on Tuesday said that French retailing giant Carrefour SA has received an offer to merge with Brazil’s Companhia Brasileira de Distribuicao.
Brazilian investment fund Gama said in a statement that it proposed a merger between Carrefour, the world’s second largest retailer by sales after Wal-Mart Stores, and CBD, a local retailing giant.
The deal would elevate CBD to Carrefour’s biggest investor. It also reflects a power struggle, as Groupe Casino -- a noted rival to Carrefour -- controls CBD through a joint venture with chairman Abilio Diniz. Casino was set to assume full control of CBD, parent of the Pao de Acucar chain, next year. Casino called the reported deal "hostile" and "illegal."
The deal, however, would catapult Carrefour to a market-leading position in Brazil, where its business has diminished in recent years. Under the terms of the deal, Gama will first offer to merge with CBD and, if accepted and approved by Casino, would then combine with Carrefour Brazil. In exchange for 50% of the new company, Carrefour would do a capital increase, giving Gama an 11.7% stake in Carrefour. Gama would also obtain Carrefour's vice-chairmanship and three board seats starting in two years.