A Brazilian retail group to enter French Carrefour's capital

French retail giant Carrefour is currently negotiating a merger of its activities in Brazil with CBD, the leading Brazilian retail group and supermarket franchise. This project could vivid tensions between Carrefour and its main competitor in France, Casino.

Carrefour last week commissioned Bank Lazard to "explore" a potential merger between its subsidiary in Brazil and Brazilian Companhia Brasileira de Distribuicao (CBD, Pao de Acucar), the local retail leader. According to news reports, Carrefour is considering this option after encountering "disappointments" in Brazil.

"In late 2010, Carrefour had provisioned EUR 550 million for inventory write-downs and potential disputes with Brazilian suppliers," explained on sunday the Journal du Dimanche, a French newspaper.

The merger would allow the Diniz family, which partially owns CBD, to enter Carrefour's capital. Abilio Diniz, 74, is the 8th Brazilian fortune with an estimated wealth of $3 billion. CBD has 1500 stores across Brazil and 140.000 employees. The company estimated turnover for 2011 is $30 billion.

However, French media explained on Sunday that the merger was not yet close to be completed. Indeed, Carrefour's main rival Casino "holds about 35% of CBD at parity with the clan Diniz" and "would oppose the merger with Carrefour to maintain a crucial alliance with CBD".

For years the two French retail groups have fought "a covert war in the tropics, purchasing franchises and opening stores" the Journal du Dimanche said. Carrefour and Casino did not yet comment the information.