Skip to main content

Pedestrians walk past a shop on a rainy day in Rio de Janeiro, Brazil, Thursday, July, 2001.DOUGLAS ENGLE/The Associated Press



Casino has raised its stake in the Brazilian retail assets it co-controls in a gesture of "trust" after it recently filed a request for arbitration against its Brazilian partner.

The French retail group increased its stake in Grupo Pão de Açúcar, Brazil's leading retailer, which it owns with the Diniz Group, to 37 per cent, up from 34 per cent.

The move demonstrates Casino's "continuing commitment towards GPA and its trust in its executive team," the retailer said in a statement on Thursday.

The increase does not change the corporate control of GPA which is exercised through Wilkes, an investment holding company through which Casino and the Diniz Group decide on management and strategy.

Casino has an option to increase its stake to 41 per cent next year, a move that would allow it to take voting control.

The retailer filed a request for arbitration against its Brazilian partner two weeks ago amid media reports that domestic rival Carrefour is considering a merger of its own Brazilian business with GPA and speculation that Abílio Diniz, GPA chairman, could enter into talks.

"One suspects it is more of an olive branch than a warning over Carrefour," one analyst said of the stake increase.

Brazil is a key driver of growth for the French group, which also said that the move "[reiterated]its intent to strengthen GPA's long-term development as well as the Group's positions in fast-growing markets."

It is "business as normal" for Casino said Justin Scarborough, analyst at RBS.

"Next year when they have the option to take control of the business will be a more important time."

Interact with The Globe