Casino: Abilio is a thief, an outlaw, and unethical.

247 – France once had a famous philosopher, Pierre-Joseph Proudhon, a precursor of socialism, who defined property in the following terms: “It is theft.” “La proprieté, c’est le vol,” he said, in his most famous, most quoted, and least understood phrase. Over the years, Proudhon has become a caricature. And all legal systems in the world recognize the right to property. Attacking someone else's property, from which the word expropriate derives, is the same as stealing, in popular jargon. And it was precisely “expropriate” that Casino used, in an official statement, to name the maneuver carried out by Pão de Açúcar, owned by Abílio Diniz, to break its shareholders' agreement and merge with Carrefour.

Here is the definition, on page 861, of the Houaiss Dictionary of the Portuguese language for the verb expropriate: "To take away (someone's) property or possession for public convenience or necessity." Since billionaire Abilio is not experiencing any need, it can be inferred that it is for convenience – unless he, who studies French in his spare time, is reading Proudhon. 

In its statement to the market, the French group Casino left no stone unturned regarding the way businessman Abilio Diniz is conducting the negotiations for the merger between Pão de Açúcar and Carrefour. Casino is a partner of Diniz in Pão de Açúcar itself and considers itself betrayed for being the last to know about the understandings that are only now beginning to be disclosed.

“The proposal, structured jointly, secretly and illegally, aims to frustrate a shareholders' agreement and indirectly expropriate from Casino the control rights acquired and paid for in 2005,” begins a public statement. “Carrefour and Mr. Abilio Diniz deliberately ignored both the law and contracts, as well as the fundamental principles of commercial ethics.”

As if that weren't enough, Casino delivered more bombshells, without mincing words: "Casino has been a loyal shareholder of CBD (Companhia Brasileira de Distribuição, the holding company of Pão de Açúcar) since 1999, when it was invited by Mr. Abilio Diniz and his family to become the company's largest shareholder, at a time when CBD was experiencing serious financial difficulties."

The final statement is a vote of confidence in the validity of contracts within Brazil: "We are confident that Brazilian laws and authorities will not allow any threat or stratagem aimed at violating legally established rights under the laws of the country to prevail."

Read below a previous news report from 247 about the most tumultuous merger ever seen in Brazil.

247 - Enemies, enemies, business is business. This seems to be the motto governing the tense plot involving the supermarket groups Pão de Açúcar, Casino, and Carrefour, with the bank BTG Pactual among them. After preventing a personal visit by Abílio Diniz to their world headquarters in Paris, Casino executives sent a letter to the Board of Directors of Wilkes – the company that controls Pão de Açúcar, formed by Diniz's capital and the French – to understand, finally, what proposal the bank BTG Pactual is putting on the table. This proposal was crafted under the coordination of Cláudio Galeazzi, former president of Pão de Açúcar and a personal friend of Diniz. "With it, Casino comes out on top," Pactual whispered to the market. The letter requesting an "urgent meeting" was delivered by Pão de Açúcar to the Securities and Exchange Commission and released to the press. The company's shares, which had already risen by more than 10% by early afternoon, jumped to over 14% before the close of trading on the São Paulo stock exchange.

Below is the previous news report from Brasil 247:

Marcio Kroehn, 247 – Less than fifteen days ago, the chairman of the board of directors of Grupo Pão de Açúcar, Abílio Diniz, signed a joint statement with his partner Casino affirming that there were no talks with competitor Carrefour to merge the operations of Pão de Açúcar and Carrefour in Brazil. Shortly before, at the end of May, the statement from the largest Brazilian retail group was even more categorical: “Grupo Pão de Açúcar is not a party to any negotiation with Carrefour and has not hired any financial advisor for this purpose.” But the truth came to light in recent days. Today, while Banco BTG Pactual informed the market about the creation of Gama, an investment fund to enable the partnership between Pão de Açúcar, its partner Casino, and competitor Carrefour, Diniz is in Paris to demonstrate the importance of merging the brands and try to avoid a definitive rupture with the French partner, who considers himself betrayed in this economic story.

This week seems decisive for Diniz's ambitions with Casino. The French partners of Pão de Açúcar, who have the contractual option to acquire control of the Brazilian retailer by the middle of next year, consider themselves deceived by his recent actions. All the statements signed by Diniz concealed what Casino executives did not admit: initiating an important negotiation without their knowledge or even notification. Casino not only filed a lawsuit against Diniz with the International Chamber of Commerce (ICC), but also requested a thorough investigation to obtain evidence of the Brazilian partner's actions in recent months. And in a search of Carrefour's offices, authorized by the courts, a sufficient amount of documents was found showing the conversation between the parties and with a financial advisor, the Brazilian firm Estater.

To appease the anger of Casino, which owns 37% of Pão de Açúcar's capital, Abílio Diniz has been trying for 48 hours in Paris to meet with Jean-Charles Naouri, the top executive of the French group. During this period, he has already met with Lars Olofsson, the global CEO of Carrefour. The problem is that Diniz would first have to defuse the bomb that was about to explode. Before the information leaked, Diniz tried to contact Naouri through all means of communication, but received no response. With the explosion planned, he flew to the French capital, imagining it would be easier to explain, face to face, what was happening and the advantages of creating a new company with a turnover of more than R$ 65 billion in the food sector. According to the statement, the deal is unlikely to go through. "The announcement of the merger proposal confirms that secret and illegal negotiations were conducted and are ongoing. However, in consideration of the public agreements that Casino signed with Abílio Diniz, no negotiation involving the future of Pão de Açúcar can take place without Casino."

Diniz's hope is to convince Naouri that Pão de Açúcar has nothing to do with BTG Pactual's proposal. The problem in this story is that Claudio Galeazzi, one of BTG's current partners, knows Pão de Açúcar intimately. He was president of the retail chain from December 2007 to March 2010 and was one of the few to adapt to Diniz's style. When he left the Group, Galeazzi handed over a company twice the size, with all its goals exceeded and with significant cost reductions. Therefore, the information Galeazzi brings from within Pão de Açúcar may have been decisive in crafting a well-crafted proposal that highlights the company's strengths and weaknesses for continued profitability in the coming years.

According to a document from BTG Pactual, the merger of Companhia Brasileira de Distribuição (controlling company of Pão de Açúcar) and Carrefour Brasil will give rise to Novo Pão de Açúcar (NPA). The offer should be evaluated by the partners involved within 60 days. According to the operation's financial advisor, the new company will share Pão de Açúcar equally with the French group Carrefour. NPA, in turn, will own 100% of Carrefour's Brazilian subsidiary. From this corporate restructuring, NPA will hold 11,7% of Carrefour worldwide, thus becoming its largest shareholder. Diniz will hold 17% of NPA and Casino 29%. With the creation of Gama, an investment fund with the sole purpose of uniting Pão de Açúcar and Carrefour, there will be an injection of €2,5 billion (R$ 5,7 billion). The funds will come from BNDESPar (1,7 billion euros) and BTG, which will contribute 800 million euros (R$ 1,82 billion).