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Brazil’s Pao de Acucar denies talks with Carrefour

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Brazilian retailer Grupo Pao de Acucar denied it is in talks with rival Carrefour about merging their units in Latin America’s biggest economy.

Pao de Acucar, Brazil’s biggest diversified retailer, said in a securities filing on Wednesday that “it is not currently a party in any negotiation with Carrefour and has not hired any financial adviser to do so.”

Speculation about a tie-up comes a year before Pao de Acucar’s controlling shareholders, Casino and Brazil’s Diniz family, have to discuss a Casino option to take full control of the company. The option becomes valid in June 2012. Casino is Carrefour’s rival in France.

In the filing, Pao de Acucar said Casino “has not authorized any third-party to represent its interests in any negotiations.” Casino and the Diniz family control two-thirds of Pao de Acucar’s common shares through an investment holding company called Wilkes.

Pao de Acucar Chairman Abilio Diniz was quoted in the filing as saying he is “always in the search of alternatives to grow the company and there is no new fact that justifies a market notice.”

Diniz has pursued acquisitions to revive growth in the 63-year-old retailer, which has lagged behind Carrefour and Wal-Mart Stores Inc (WMT.N) for most of the past decade.

Shares of the Sao Paulo-based retailer fell for a second straight day on Wednesday, shedding 1.3 percent to 65.13 reais. The stock has gained 21 percent over the past year.

Newspapers in Brazil and France reported that Pao de Acucar and Carrefour could seek to merge their supermarket and hypermarket units. The newspaper Valor Economico said Carrefour and Diniz had been negotiating a deal for about a month.

A merger would give the retailers a combined 28 percent market share in Brazil, Bank of America Merrill Lynch analyst Robert Ford said in a report on Monday. Cost savings could top $1 billion a year, he estimated.

Source : Reuters

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