Carrefour‘s board of directors has backed a plan to merge its operations in Brazil with the country’s largest retailer CBD.

The world’s second-largest retailer said today (4 July) that the proposal – put forward last week by Gama, a fund managed by Brazilian investment bank BTG Pactual – would “significantly increase its exposure to growth markets”.

Under the plan, Carrefour will own 50% of the enlarged business but, by 2013, when the retailer expects to fully consolidate the combined entity, 40% of the French firm’s sales will come from “growth markets”.

“This transaction, should it be completed, would lead to the creation of a major retail player in Brazil, the world’s third-biggest market in terms of food spending, with estimated pro-forma 2011 sales for the combined entity of more than EUR30bn (US$43.51bn),” Carrefour said.

The plan is backed by one of CBD’s two shareholders, Brazilian businessman Abilio Diniz. He heads the Diniz Group that co-owns the retailer with Carrefour’s French rival Casino.

The proposal, however, has angered Casino, which had already lodged for arbitration with Diniz after speculation emerged in May that the businessman had held secret talks with Carrefour over a possible deal.

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Casino claimed the talks broke a 2006 agreement it has with Diniz that says any talks over the future of CBD, also known by its trading name Grupo Pao de Acucar, must include both the Brazilian firm’s shareholders.

When the Gama-led plan was announced last Tuesday (27 June), Casino called it “a long-standing, illegal, planned, financial transaction”.

Casino CEO Jean-Charles Naouri is set to meet the head of the Brazilian National Development Bank (BNDES), which has offered to part-fund the deal, to discuss the proposal.