NEWSMAKER-Bookish Frenchman becomes Brazil retail kingpin
PARIS, June 21 |
PARIS, June 21 (Reuters) - An intellectual Frenchman who came to retail relatively late in his career is set to become the industry's kingpin in Brazil, one of the world's largest and fastest-growing consumer markets.
On Friday, Jean-Charles Naouri, the steely-eyed boss of French stores group Casino, will take control of Brazil's biggest retailer, Grupo Pao de Acucar, the climax of his drive to create an emerging markets powerhouse.
For the 63 year-old, the move will come with the sweet taste of revenge over estranged Brazilian partner Abilio Diniz, the longtime Pao de Acucar chairman who last year tried to tear up an agreement with Casino by merging his company with the French group's arch-rival Carrefour.
Naouri's victory in the bitter dispute that followed is emblematic of the way he has built a 34-billion-euros a year retail empire spanning ten territories by taking minority stakes in struggling firms, and then vigorously enforcing agreements to increase Casino's influence when recovery is assured.
"He does not initiate the disputes. They arise because entrepreneurs cannot accept to sell their companies when the day comes," said business strategist Alain Minc who advises Naouri.
On June 22, Algeria-born Naouri will become chairman of Pao de Acucar's holding company as mapped out under a 2005 pact with Diniz. While the Brazilian tycoon will retain the title of Pao de Acucar chairman, his weight in decision-making will be much diminished.
Casino first invested in Pao de Acucar in 1999 when it came to its rescue, and Brazil is now its second largest market after France and a key pillar of its expansion into emerging economies at a time of muted European growth.
After Casino takes full control, Brazil will represent 44 percent of the group's estimated sales of almost 54 billion euros and 53 percent of estimated operating profit of 2.6 billion for 2013, according to Oddo Securities analysts.
MARKED FOR GREAT THINGS
The son of a doctor and English teacher, Naouri was marked for great things from an early age as a graduate of the Ecole Normale Superieure and Ecole Normale d'Administration (ENA), the breeding grounds of France's political and business elites.
He started his career in French government ministries including finance, where he was chief of staff of Socialist minister Pierre Beregovoy in the 1980s, before switching to the private sector and joining Banque Rothschild in 1987.
"He is four times faster than the smartest people I know," said Serge Weinberg, the head of Weinberg Capital Partners and his friend since the ENA years.
People close to Naouri describe him as a perfectionist, a complex and reserved man, who does not mingle much with the business circles of the French elite.
"He is a very intense man, an erudite who is interested in fundamental issues," Weinberg added.
An opera buff who reads Greek and Latin, Naouri set up his own fund Euris in 1987.
He was drawn into retailing through Rallye, an investment group which now owns 49.9 percent of Casino's capital.
Within years, he was embroiled in his first battle, helping Casino fend off a bid in 1997 from French group Promodes, which was later to be taken over by Carrefour.
Since becoming chief executive of Casino in 2005, Naouri has been credited with turning the business around, shedding loss-making operations and opening it to fast-growth emerging markets like Brazil, Vietnam, Colombia and Thailand.
Naouri is described as a demanding boss who can be harsh with staff. "If he gets a vague answer, you can very quickly lose your job," said a former Casino employee who spoke condition of anonymity.
But the father of three - eldest son Gabriel, 30, heads the group's hypermarkets in the Paris region - is also prompt to reward loyal staff.
Naouri has expanded Casino mostly through partnerships with local founding families in France and abroad, largely because his group had limited finances.
This has led to some stormy relationships.
In mid-2000, Casino took control of the Franprix and Leader Price stores from the French Baud family, which is still locked in lawsuits with Casino.
"He is a tough contract negotiator but one who respects the contracts," said Minc.
Naouri is currently locked in a battle with Philippe Houze, the head of French retailer Galeries Lafayette, for control of their joint-venture Monoprix.
Despite a partnership spanning over a decade, Naouri's relations with Diniz deteriorated suddenly last year when the Brazilian tried to engineer a merger with the local unit of Carrefour. The plan would have cemented Pao de Acucar's dominance in Brazil, but also opened it to Casino's arch-rival.
Naouri took the proposal as treachery and counter-attacked, even requesting arbitration with the International Chamber of Commerce. He also won a court order allowing French bailiffs to raid Carrefour's offices last year.
With relations soured between Diniz and Naouri, their camps have discussed alternatives to their shareholder pact that might allow them to part ways. But a compromise has been elusive.
Last month, Naouri settled scores with some of those he feels have betrayed him, ditching both Diniz and Galeries Lafayette's Houze from Casino's board.
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