CBD, Brazil's largest supermarket operator, and Casa Bahia Comercial, the country's largest retailer of durable goods, have agreed to form a venture to sell food and non-food products.

Under the agreement, the current shareholders of Casas Bahia will contribute their retail business to CBD unit Ponto Frio, in which they will hold a 49% stake.

CBD, better known through its trading name Grupo Pao de Acucar, will continue to hold a majority ownership in Ponto Frio.

With sales of BRL13.8bn (US$7.97bn) last year, Casas Bahia operates 513 stores in the country.

CBD and Casas Bahia will also both contribute their respective internet operations to a new company in which CBD will hold 83% and Casas Bahia will have a 17% stake. This new entity will be the second-largest Brazilian internet retailer.

The joint venture will allow the companies to create a larger variety of products, better service and easier access to credit, CBD said.

The proposal will be submitted to CBD's general meeting in January and is expected to be completed in April next year.

If completed, the deal will mean CBD will become Brazil's largest private employer, with 68,000 employees and gross revenues of approximately BRL40bn.

Commenting on the proposal, French retail giant Groupe Casino, which holds a majority stake in CBD, said that it "welcomes" the strategic tie-up and that the plan "confirms the priority" given to expanding in Brazil.