CBD vs. Casino: How Brazil's Biggest Retailer Fought a French Governance Takeover-and Lost
Brazilian retail markets had been a tempting arena for growth-minded companies since the country instituted democratic reforms in the 1980s. To raise capital for continued expansion, Ab lio Diniz, the billionaire chairman of Brazil's number-one retailer, Companhia Brasileira de Distribui o (CBD), entered a long-term agreement in 2005 to transfer control of the retail empire to the CEO of the French retailer Casino Guichard-Perrachon SA in 2012. As the date for the planned takeover drew near, Diniz tried to get around his agreement with Casino by engaging in secret negotiations to create a new, Brazil-based partnership with Carrefour SA, Casino's retailing archrival in France. Drawing on his network of influential advisors and investors and his close ties with government, Diniz secretly struck a plan to secure government-backed private funding to merge CBD with Carrefour's Brazilian operations and install himself at the helm of a new retailing giant with a commanding Brazilian market share. Once discovered, the proposal sparked a fierce counterattack by Casino's chairman, Jean-Charles Naouri. Marshaling an army of lawyers, Naouri filed a request for international arbitration, raised Casino's stake in CBD, and sought and won a French court order to raid Carrefour headquarters for documents. Naouri was able to enforce the 2005 agreement after persuading Brazilian officials to abandon their plans to support a CBD-Carrefour merger. The battle led to a permanent split between former partners Naouri and Diniz-and to Diniz's eventual exit from the Brazilian retailing empire he had built. Students will explore how weak corporate governance at CBD and in Brazil in general, as well as political and cultural differences between the two leaders and their respective nations, helped ignite one of the biggest intercontinental boardroom showdowns in history.