Carrefour has sold a 10 per cent stake in its Brazilian business to billionaire Abilio Diniz (77), in a first step towards a possible separate listing, as Europe's largest retailer looks to raise cash to accelerate growth in its second-largest market.
With its core French market on the mend, Carrefour head Georges Plassat has long said he wants to speed up expansion in fast-growing Brazil and China and that a flotation in Brazil is one of its funding options.
If Carrefour goes ahead with a Brazilian listing, it would be joining a trend among big western retailers to sell or list parts of their more profitable emerging market businesses.
Germany's Metro, for instance, was planning to list its Russian cash-and-carry business but had to shelve the plan due to the Ukraine crisis, while Britain's Tesco spun off its China operations this year into a separate joint venture.
Mr Diniz’s investment company Peninsula bought a 10 per cent stake for about 1.8 billion reals (€540 million), the France-based retailer said. Peninsula also has the option to raise its stake to a maximum 16 per cent within five years.
Analysts had estimated the Brazilian business to be worth up to €9 billion, whereas the deal valued the company at about €6 billion.
The deal marks Mr Diniz's return to retailing and closer ties with the Carrefour group, in which he has built a stake of a little under 3 per cent, according to sources. The eldest son of the founder of GPA, Carrefour's Brazilian arch rival owned by French retailer Casino, Mr Diniz left GPA in September last year to turn around foods maker BRF.
In 2011, he fell out with Casino after he secretly sought to broker a merger with Carrefour. The deal ultimately fell through. Carrefour has a 40-year history in Brazil with 256 stores ranging from hypermarkets to Carrefour Express stores. It had 34 billion reals of sales there in 2013, about an eighth of its total group revenue. – (Reuters)
