--CBD Chairman Abilio Diniz to be removed from post, source says
--Diniz tasked with calling board meeting to name new chairman
--Casino will exercise option to take sole control of CBD
(Updates with CBD's spokeswoman in the last paragraph.)
By Matthew Cowley and Luciana Magalhaes
Of DOW JONES NEWSWIRES
SAO PAULO -(Dow Jones)- French supermarket company Casino Guichard-Perrachon SA (CO.FR, CGUSY) Wednesday said it initiated the process to take over sole control of leading Brazilian supermarket chain Companhia Brasileira de Distribuicao SA (CBD, PCAR5.BR), or CBD, ending the long reign of the founding Diniz family.
"Casino will name a new chairman, other than Abilio Diniz," who currently controls CBD, a person with knowledge of the situation said. "This is a key part of the transition."
Casino said it formally has informed Diniz of its decision to exercise the right to appoint the chairman of Wilkes's board. Wilkes is the holding company that controls CBD.
The statement from Casino Wednesday marks the first step in a process that ultimately will allow Casino to become the sole controlling shareholder of CBD on June 22, as laid down in the contract signed between Casino and Diniz back in 2005.
According to a representative for Casino's office in Brazil, the contract between Casino and the Diniz family required a notification to be sent at least one month prior to the June 22 takeover date. Casino decided to give ample time for the transition by starting the process within three months of the date.
As chairman of Wilkes, Diniz will have to call a meeting of Wilkes' board to name the next chairman.
Casino bought a large block of CBD voting shares in 2005. However, relations between Diniz and Casino were strained in 2011 when Diniz proposed a merger with the Brazilian unit of Carrefour SA (CA.FR, CRRFY), another major French retailer, in a move that might have isolated Casino in the Brazilian market. The attempt failed when Casino shareholders vetoed the deal.
Since 2005, Casino and the Diniz family have jointly managed CBD, Brazil's largest supermarket chain. CBD held a market share of approximately 20% in 2011.
In an email, a spokeswoman for the Diniz family said the notification doesn't change Casino's right to take sole control of CBD only from June 22. She confirmed that Casino had to send the notification a month before June 22.
-By Matthew Cowley and Luciana Magalhaes, Dow Jones Newswires; 55 11 3544-7090; email@example.com
--Tom Murphy in Sao Paulo contributed to this article.
(END) Dow Jones Newswires
March 21, 2012 18:45 ET (22:45 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.