Brazil: Casino to take control of GPA
The changeover will remove some uncertainties, but others will only by extinguished over time. Among them, the biggest question is whether the two main shareholders agree to work and prosper together.
Back in 2005, Brazilian businessman Abilio Diniz, chairman of GPA, made Casino and its chief executive, Jean-Charles Naouri, joint partners in the business founded by his family. But the agreement foresaw that Mr. Diniz, now 75 years old, would hand over full control to Mr. Naouri on June 22, 2012.
After working together well for the first 11 years, relations between Mr. Diniz and Mr. Naouri have been strained since 2011, when the Brazilian billionaire proposed a merger with the Brazilian unit of France's Carrefour, in a move that might have isolated Casino in the Brazilian market. The attempt failed when Mr. Naouri rejected the deal.
Now, they will have to find a way to work closely or, if this alternative proves not to be viable, Mr. Diniz would have the alternative of exiting the company in which he spent all his life.
Proposals to split off parts of GPA, which is formally known as Companhia Brasileira de Distribuicao SA, to allow Mr. Diniz to follow a separate path, have also been discussed by executives representing both businessmen, but so far with no success, according to people close to the talks.
Under the 2005 agreement, Mr. Diniz has two opportunities over the next 10 years to sell his shares to Casino, but it's not yet clear what course of action Mr. Diniz, who will stay on as chairman of GPA, will take.
"I think it's going to be a personal decision," said Francisco Chevez, an analyst at HSBC. Once the change of control happens, Mr.Diniz and Mr. Naouri might decide that they need to work together to make the company stronger and to face likely tougher competition in the Brazilian retail in the future, Mr. Chevez said.
There are those who dispute that view, saying the battle for control of GPA caused a permanent break in trust among the French and the Brazilian partners.
Meetings to be held on Friday will mark the control transfer. Casino CEO Jean-Charles Naouri will be appointed chairman of the board of directors of Wilkes, replacing Abilio Diniz. At an extraordinary shareholders meeting of GPA later in the day, three new board members chosen by Casino will be nominated and approved.
"From the 22nd of June, I will continue to be the second main shareholder of GPA, and I will remain active, always seeking the best for the company that my father created," a spokesperson for Diniz said recently.
According to HSBC's Mr. Chevez, the deal could work out very well if the two agree to work together.
Source: www.silobreaker.com
