Casino today (4 July) insisted that a proposal to merge Brazil’s largest retailer CBD with Carrefour’s local operations needed its support to go through.

The French retailer, one of CBD’s two controlling shareholders, has publicly opposed the plan since it was announced last Tuesday.

Earlier today, Carrefour said its board of directors had backed the plan, which was put forward last week by Brazilian investment fund Gama and is supported by Abilio Diniz, the head of the other key shareholder in CBD.

In response, Casino said its “consent” was required before any deal could go ahead. Casino has consistently argued that a 2006 agreement it has with Diniz means it cannot be excluded from any talks over the future of CBD. The French firm also insists the Gama-led proposal can only go ahead with the approval of Wilkes, which is the holding company it formed with Diniz to own the Brazilian retailer.

“According to Carrefour, the consummation of this transaction is conditioned upon acceptance by CBD. However, Carrefour deliberately fails to state that Wilkes’ consent, and accordingly that of Casino, are required,” Casino said. 

“Any project involving CBD’s future, over which Casino has joint control, must take place in strict observance of the shareholders’ agreement between the Casino Group and the Diniz Group, and is thus conditioned upon the unanimous approval of the Wilkes board of directors.”

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Casino, which last week labelled the proposal “a long-standing, illegal, planned financial transaction”, said Carrefour and its board “may be liable in accepting, despite repeated warnings, a hostile transaction arising out of illegal negotiations”.

When speculation first emerged in May of talks between Diniz and Carrefour, Casino lodged for arbitration against its CBD co-shareholder.

Last week, in newspaper advertisements in the Brazilian press, Diniz asked Casino to examine the proposal. The retailer, Diniz said, had “so far, dared, hastily and emotionally to condemn a transaction with no analysis”. He added: “The main question is …. Is the transaction good or not for Pao de Acucar?”

Two days earlier, Casino had published its own ads and said Diniz had “deliberately ignored both the law and contracts as the fundamental principles of business ethics”.

Casino owns 43% of CBD after upping its stake in the retailer from 37% on Thursday. It claims that, in a 2005 deal with Diniz, it bought the right to be the sole controlling shareholder in CBD next year.

Today, Casino CEO Jean-Charles Naouri is meeting with the head of the Brazilian National Development Bank (BNDES), which has agreed to part-fund the transaction, to discuss the situation.