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Carrefour and Casino: Rumor About Brazilian Supermarkets Merge Under Grupo Pão de Açucar

|Includes: CA, Companhia Brasileira de Distribuio (CBD), CGUIF

According to published this Monday at newspaper Valor Econômico, about a statement on last Sunday's French newspaper Journal du Dimanche, Carrefour (NASDAQ:CA) would be willing to negotiate the merger of its Brazilian subsidiary to Grupo Pão de Açúcar (NYSE:CBD) after quarters of poor performance and loss of Brazilian market share in the segment. Thus, according to the report, the gross revenue of the resulting company would be approximately 30% of the total sales in the supermarkets sector in Brazil. The companies have not confirmed this information.
It's worth noting that Grupo Pão de Açúcar is controlled by Wilkes Participações S.A., which is owned by the also French Casino Guichard-Perrachon (OTCPK:CGUIF) and the family Diniz, founder of Pão de Açúcar. Take

Potentially positive for CBD, if confirmed, since it would raise their exposure to the food segment, one of the biggest drivers for the company, and it would provide gains of a possible synergy with better negotiation with suppliers, via increased scale and improved logistics. Another highlight is the use of physical spaces of Carrefour, which also have their stores concentrated in south and southeast, increasing the company's participation in these markets. Note that the retail food business continue to be quite informal and fragmented in Brazil, and if these rumors are confirmed, the news should be viewed favorably by investors, depending, of course, on deal conditions.