December 17, 2014 / 8:35 PM / 3 years ago

Tycoon Diniz buys stake in Carrefour's Brazil unit, source says

SAO PAULO (Reuters) - Brazilian billionaire Abilio Diniz agreed to buy a 10 percent stake in Carrefour SA’s (CARR.PA) Brazilian unit, a source with direct knowledge of the situation said on Wednesday, potentially strengthening its ability to take on the supermarket chain Diniz’s father founded.

Abilio Diniz listens to a reporter's question during a news conference in Sao Paulo April 10, 2013. REUTERS/Nacho Doce

Under terms of the deal, Diniz, whose Peninsula Participações holding company has been on an investing spree over the past 18 months, will pay between 500 million euros ($615 million) and 600 million euros for the stake, said the source, who requested anonymity because the talks are private.

A deal with Carrefour would mark Diniz’s return to retailing. The eldest son of the founder of GPA SA (PCAR4.SA), Carrefour’s Brazilian arch rival, he left the company in September last year to turn around BRF SA (BRFS3.SA), a Brazilian processed foods company that is the world’s No. 1 poultry producer.

The transaction does not include Carrefour’s Atacadão warehouse retailer, according to the source.

The stake will give Diniz the right to appoint two members to the board of directors of Carrefour’s Brazil unit but no “management rights,” the source said.

A spokeswoman for Península declined to comment, as did Carrefour through media officials based in Paris and São Paulo.

Diniz had already teamed up with buyout firm Tarpon Investimentos SA (TRPN3.SA) in a recent purchase of Carrefour stock.

In recent months, Diniz’s Peninsula has invested in Dufry AG (DUFN.S), BRF, GAEC Educação SA (ANIM3.SA) to diversify Peninsula’s interests outside of Diniz’s traditional sweet spot of retail.

In 2011, Diniz fell out with Casino Guichard Perrachon & Cie (CASP.PA), his then-partner at GPA, after he secretly sought to broker a merger with Casino rival Carrefour. The Carrefour deal ultimately fell through, allowing Casino to follow through on a previous agreement to take a majority stake in GPA.

According to the source, proceeds from a deal with Diniz would help Carrefour take on GPA in Brazil’s competitive retail market. Earlier in the say, a source had told Reuters that Diniz, 77, was seeking management rights and Atacadão to be included in the deal.

Still, Carrefour has not ruled out an initial public offering for the unit, and Diniz’s involvement in the business as an anchor investor could help the plan in terms of visibility and future valuation, the source said.

($1 = 0.81 euros)

Additional reporting by Marcela Ayres in São Paulo and Dominique Vidalon in Paris; Editing by Jeffrey Benkoe and Christian Plumb

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