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Will gain controlling stake in Casas Bahia
Brazilian retail group Pao de Acucar (Sao Paulo) has acquired a controlling stake in rival Casas Bahia in a non-cash deal that will eventually lead to Pao de Acucar holding a 51 percent stake in family-owned Casas Bahia through its home appliance unit Globex Utilidades. Through the agreement, Casas Bahia will own all of the combined company's real estate and rent the space back to the new firm. The combination of Globex and Casas Bahia, which will be called Nova Casa Bahia, will result in 1015 appliance stores in 18 states and the federal district of Brasilia. The transaction is expected to be completed within 120 days.
According to Reuters, the company sees the move as a way to cut costs and increase expansion in Brazil. "It was an opportunity to seek synergies and efficiency," says chairman Abilio Diniz, who co-owns the retail company with France's Casino. "I think this synergy estimate is low. We have identified a series of opportunities."
The deal also consolidates Pao de Acucar's lead over big multinationals such as French retailer Carrefour and U.S.-based Walmart Stores Inc., which have been investing heavily in Brazil in recent years. In June, Pao de Acucar, which operates a supermarket chain of the same name, paid roughly $430 million for 70 percent of Globex, the owner of the Ponto Frio chain of home appliance stores.
The Brazilian market for home appliances has gained momentum in recent months after the government cut taxes on household appliances as part of a housing plan for low-income families.
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