CBD vs. Casino: How Brazil’s Biggest Retailer Fought a French Governance Takeover-and Lost Harvard Case Solution & Analysis

Brazilian retail markets had been attracting growth-minded companies since the state instituted democratic reforms in the 1980s. To raise capital for continuing expansion, Abilio Diniz, the billionaire chairman of Brazil's number-one retailer, Companhia Brasileira de Distribuicao (CBD), entered a long term deal 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 attempted to get around his agreement with Casino by participating in secret negotiations to produce a new, Brazil-based venture with Carrefour SA, the retailing archrival in France of Casino. Drawing on his network of powerful advisors and investors and his close ties with government, Diniz secretly struck a strategy to procure government-backed private capital to blend CBD with Carrefour's Brazilian businesses and install himself at the helm of a new retailing giant with a controlling Brazilian market share. Once discovered, the proposition ignited a fierce counterattack by Casino's chairman, Jean-Charles Naouri.

Marshaling an army of lawyers, Naouri sought and won, increased Casino's stake in CBD, and filed a request for international arbitration a French court order to raid Carrefour headquarters for documents. Naouri was able to apply the 2005 arrangement after convincing Brazilian officials to abandon their strategies to support a CBD-Carrefour merger. The battle resulted in a long-term schism between former partners Naouri and Diniz -and to Diniz's eventual exit from the Brazilian retailing empire he had built. Students will research how weak corporate governance at CBD and in Brazil in general, as well as ethnic and political differences between their respective states and the two leaders, helped ignite one of the greatest intercontinental boardroom confrontations in history.

PUBLICATION DATE: August 14, 2015 PRODUCT #: KEL909-PDF-ENG

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CBD vs. Casino: How Brazil’s Biggest Retailer Fought a French Governance Takeover-and Lost

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