Pao de Acucar says KPMG looking at Via Varejo after complaint

RIO DE JANEIRO Oct 16 (Reuters) - Pao de Acucar said on Tuesday that allegations made by a minority partner about problems with a 2010 merger that helped turn the company into its Brazil's biggest retailer were "hasty, distorted and damaging".

But it added that audit firm KPMG was analysing the companies that merged to form Via Varejo -- the home appliance and online retail unit at the centre of the allegations.

The Klein family, which founded the Casas Bahia chain before merging it with Pao de Acucar's operations for a 47 percent stake in the unit now known as Via Varejo, is threatening to take Pao de Acucar to arbitration, saying audits have uncovered possible issues with the terms of the 2010 deal.

A lawyer for the Kleins told Reuters that the audit had found "inconsistencies" in the balance sheet of Globex, one of the companies that united to create Via Varejo, which could have implications for the share swap ratio that was used.

Pao de Acucar added that the merger that formed Via Varejo was legally irreversible.

The legal maneuvering highlights lingering tensions between the retailer's biggest shareholders. Their simmering distrust threatened to break up the group earlier this year, before Chairman Abilio Diniz handed control over to French retailer Casino in June. (Reporting by Juliana Schincariol; Writing by Alonso Soto; Editing by Edwina Gibbs)