CBD in Play as Carrefour Mulls Merger

| About: Carrefour S.A. (CRRFY)
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By Tim Seymour

We have mentioned Brazilian retailer CBD two or three times over the last few months for just this reason: Tuesday printed a monster move on M&A excitement.

CBD shares soared as much as 17% on news that strategic investors are pushing French retail giant Carrefour (CRERY.PK) to merge its Brazilian assets with CBD to create a true Latin powerhouse:

The idea officially comes as a surprise to both companies, which had spent much of the last month discounting rumors that they are ready to merge.

Under the proposed terms, Carrefour would pay roughly market price for CBD, gaining control of the company and giving Brazilian investors some seats on the new parent company’s board in the process. However, Carrefour archrival Casino (thinly traded as OTC:CGUIY) owns 37% CBD and will almost certainly fight any merger. It's already called the arrangement “illegal and secret.”

This has already been a monster move and more proof that the emerging demographic story is still playing out. Carrefour needs to increase its exposure to emerging markets. And the Brazilians are once again proving that they are getting in the back door of some of the biggest iconic brands in the world — and will ultimately be running these companies.

As with Anhesuer/Busch (NYSE:BUD), Brazilians will be running Carrefour at some point. You heard it here first.