* Casino requests Diniz comply with pact obligations
* Shareholder pact related to their common company Wilkes
* Diniz chairman, Carrefour in talks - sources
* Casino shares down 0.3 pct, Carrefour shares up 1.7 pct
(Adds further details, source, share price reaction)
By Dominique Vidalon
PARIS, May 31 (Reuters) - French retailer Casino (CASP.PA) warned its Brazilian partner Diniz against negotiating a merger with its rival Carrefour behind its back, saying an approach flouts their existing agreement.
Casino filed for international arbitration against the Diniz group, its partner in Brazilian retail giant Grupo Pao de Acucar (CBD.N) (PCAR4.SA), as speculation mounts that chairman Abilio Diniz had approached Carrefour (CARR.PA) to discuss a possible merger. [ID:nN30235318]
Diniz initiated the talks after he became concerned that U.S.-based Wal-Mart Stores (WMT.N) and Chilean retailer Cencosud CEN.SN could be interested in acquiring Carrefour's Brazilian assets, one source had told Reuters. Wal-Mart trails Pao de Acucar and Carrefour in Brazil's $230 billion retail industry.
Casino, which told Reuters last week that it had not given the go-ahead for the Diniz family to start talks with its French rival, wants Diniz to comply with their shareholder pact.
Brazil, Casino's second market behind France, made 32 percent of its 2010 international sales of 11.122 billion euros.
"Casino has filed on 30 May 2011 a request for arbitration under ICC (International Chamber of Commerce) Rules against the Diniz Group," Casino said in a statement.
Casino requests the Diniz group "comply with and perform its obligations under the shareholders' agreement dated as of 27 November 2006 and relating to their common company Wilkes," it added.
By 0756 GMT, Carrefour shares were up 1.7 percent while Casino shares were down 0.3 percent.
REMINDER
The ICC arbitration request is to remind Diniz he cannot negotiate without Casino, said a source who asked to remain anonymous.
Diniz and his family control Pao de Acucar, along with Casino, through an investment partnership that has lasted about 12 years.
The talks with Carrefour come as the Diniz family is gearing up to discuss Casino's option to take full control of Pao de Acucar. The option becomes valid in June 2012.
Pao de Acucar has said repeatedly that it has not hired any advisor to explore an association with a rival and Diniz has been negotiating independently from the group.
A combination of Pao de Acucar and Carrefour's Brazilian unit could help reduce fragmentation in Brazil's retail market, 60 percent of which is dominated by the 10 biggest retailers.
A merger would give the combined group market share of 28 percent and annual cost savings of more than $1 billion, Bank of America Merrill Lynch analyst Robert Ford said in a report.
Diniz and Casino created in 2005 an investment holding company called Wilkes through which they control their interests in Pao de Acucar.
Wilkes owns about 66 percent of Grupo Pao de Acucar's voting shares, elects management at the company and defines strategy in unanimous votes.
Pao de Acucar's board has 14 members, including five representing Casino, five representing the Diniz family and four independent directors appointed by mutual consent. (Reporting by Dominique Vidalon; Editing by Louise Heavens)
* Casino requests Diniz comply with pact obligations
* Shareholder pact related to their common company Wilkes
* Diniz chairman, Carrefour in talks - sources
* Casino shares down 0.3 pct, Carrefour shares up 1.7 pct
(Adds further details, source, share price reaction)
By Dominique Vidalon
PARIS, May 31 (Reuters) - French retailer Casino (CASP.PA) warned its Brazilian partner Diniz against negotiating a merger with its rival Carrefour behind its back, saying an approach flouts their existing agreement.
Casino filed for international arbitration against the Diniz group, its partner in Brazilian retail giant Grupo Pao de Acucar (CBD.N) (PCAR4.SA), as speculation mounts that chairman Abilio Diniz had approached Carrefour (CARR.PA) to discuss a possible merger. [ID:nN30235318]
Diniz initiated the talks after he became concerned that U.S.-based Wal-Mart Stores (WMT.N) and Chilean retailer Cencosud CEN.SN could be interested in acquiring Carrefour's Brazilian assets, one source had told Reuters. Wal-Mart trails Pao de Acucar and Carrefour in Brazil's $230 billion retail industry.
Casino, which told Reuters last week that it had not given the go-ahead for the Diniz family to start talks with its French rival, wants Diniz to comply with their shareholder pact.
Brazil, Casino's second market behind France, made 32 percent of its 2010 international sales of 11.122 billion euros.
"Casino has filed on 30 May 2011 a request for arbitration under ICC (International Chamber of Commerce) Rules against the Diniz Group," Casino said in a statement.
Casino requests the Diniz group "comply with and perform its obligations under the shareholders' agreement dated as of 27 November 2006 and relating to their common company Wilkes," it added.
By 0756 GMT, Carrefour shares were up 1.7 percent while Casino shares were down 0.3 percent.
REMINDER
The ICC arbitration request is to remind Diniz he cannot negotiate without Casino, said a source who asked to remain anonymous.
Diniz and his family control Pao de Acucar, along with Casino, through an investment partnership that has lasted about 12 years.
The talks with Carrefour come as the Diniz family is gearing up to discuss Casino's option to take full control of Pao de Acucar. The option becomes valid in June 2012.
Pao de Acucar has said repeatedly that it has not hired any advisor to explore an association with a rival and Diniz has been negotiating independently from the group.
A combination of Pao de Acucar and Carrefour's Brazilian unit could help reduce fragmentation in Brazil's retail market, 60 percent of which is dominated by the 10 biggest retailers.
A merger would give the combined group market share of 28 percent and annual cost savings of more than $1 billion, Bank of America Merrill Lynch analyst Robert Ford said in a report.
Diniz and Casino created in 2005 an investment holding company called Wilkes through which they control their interests in Pao de Acucar.
Wilkes owns about 66 percent of Grupo Pao de Acucar's voting shares, elects management at the company and defines strategy in unanimous votes.
Pao de Acucar's board has 14 members, including five representing Casino, five representing the Diniz family and four independent directors appointed by mutual consent. (Reporting by Dominique Vidalon; Editing by Louise Heavens)
* Casino requests Diniz comply with pact obligations
* Shareholder pact related to their common company Wilkes
* Diniz chairman, Carrefour in talks - sources
* Casino shares down 0.3 pct, Carrefour shares up 1.7 pct
(Adds further details, source, share price reaction)
By Dominique Vidalon
PARIS, May 31 (Reuters) - French retailer Casino (CASP.PA) warned its Brazilian partner Diniz against negotiating a merger with its rival Carrefour behind its back, saying an approach flouts their existing agreement.
Casino filed for international arbitration against the Diniz group, its partner in Brazilian retail giant Grupo Pao de Acucar (CBD.N) (PCAR4.SA), as speculation mounts that chairman Abilio Diniz had approached Carrefour (CARR.PA) to discuss a possible merger. [ID:nN30235318]
Diniz initiated the talks after he became concerned that U.S.-based Wal-Mart Stores (WMT.N) and Chilean retailer Cencosud CEN.SN could be interested in acquiring Carrefour's Brazilian assets, one source had told Reuters. Wal-Mart trails Pao de Acucar and Carrefour in Brazil's $230 billion retail industry.
Casino, which told Reuters last week that it had not given the go-ahead for the Diniz family to start talks with its French rival, wants Diniz to comply with their shareholder pact.
Brazil, Casino's second market behind France, made 32 percent of its 2010 international sales of 11.122 billion euros.
"Casino has filed on 30 May 2011 a request for arbitration under ICC (International Chamber of Commerce) Rules against the Diniz Group," Casino said in a statement.
Casino requests the Diniz group "comply with and perform its obligations under the shareholders' agreement dated as of 27 November 2006 and relating to their common company Wilkes," it added.
By 0756 GMT, Carrefour shares were up 1.7 percent while Casino shares were down 0.3 percent.
REMINDER
The ICC arbitration request is to remind Diniz he cannot negotiate without Casino, said a source who asked to remain anonymous.
Diniz and his family control Pao de Acucar, along with Casino, through an investment partnership that has lasted about 12 years.
The talks with Carrefour come as the Diniz family is gearing up to discuss Casino's option to take full control of Pao de Acucar. The option becomes valid in June 2012.
Pao de Acucar has said repeatedly that it has not hired any advisor to explore an association with a rival and Diniz has been negotiating independently from the group.
A combination of Pao de Acucar and Carrefour's Brazilian unit could help reduce fragmentation in Brazil's retail market, 60 percent of which is dominated by the 10 biggest retailers.
A merger would give the combined group market share of 28 percent and annual cost savings of more than $1 billion, Bank of America Merrill Lynch analyst Robert Ford said in a report.
Diniz and Casino created in 2005 an investment holding company called Wilkes through which they control their interests in Pao de Acucar.
Wilkes owns about 66 percent of Grupo Pao de Acucar's voting shares, elects management at the company and defines strategy in unanimous votes.
Pao de Acucar's board has 14 members, including five representing Casino, five representing the Diniz family and four independent directors appointed by mutual consent. (Reporting by Dominique Vidalon; Editing by Louise Heavens)
