UPDATE 2-Brazil retail tycoon Diniz elected chairman of BRF

Tue Apr 9, 2013 5:13pm EDT

Related Topics

* Some say chairman's appointment is conflict of interest

* Diniz sold $431 mln in Pão de Açúcar shares on Tuesday

By Aluisio Alves and Fabiola Gomes

SAO PAULO, April 9 (Reuters) - Shareholders of BRF Brasil Foods SA elected retail tycoon Abilio Diniz as chairman on Tuesday, bringing in a seasoned dealmaker who could help the world's largest poultry exporter speed up international expansion and push for higher domestic prices.

Six percent of the voting shareholders were against Diniz's candidacy on Tuesday afternoon while 12.8 percent abstained and the rest voted in favor.

Diniz plans to stay on as chairman of Pão de Açúcar SA , his office said on Tuesday, despite some accusations that holding both positions creates a conflict of interest. Brasil Foods is a major supplier to Pão de Açúcar, Brazil's largest supermarket chain. Pension fund Petros, which holds 10 percent of BRF, stated in February its opposition to Diniz's appointment.

The 76-year-old entrepreneur is seen by many analysts as a perfect fit for BRF's strategy of expanding more rapidly in overseas markets as well as helping management implement a smooth price increase on its home turf. But some have said that Diniz, who is no stranger to boardroom battles, could pursue these goals in a rather aggressive and risky fashion.

Shares of BRF closed down 1.44 percent after the vote. They have risen nearly 30 percent over the past 12 months.

Pão de Açúcar shares closed down 0.57 percent.

Diniz is divesting some of his stake in Pão de Açúcar as part of a plan to invest in other Brazilian companies and as relations with his partner in the company - France's Casino Guichard Perrachon & Cie - soured after he attempted a failed merger with Casino rival Carrefour SA.

On Tuesday, Diniz sold 7.96 million preferred shares of Pão de Açúcar, raising 853 million reais ($431 million).

Casino Chief Executive Jean-Charles Naouri had said he hoped "ethical and governance principles" would prevent Diniz from taking the position as chairman. BRF's board nominated Diniz on Feb. 21, shortly after Nildemar Secches said he would step down.

Though it struggled with rising grain costs throughout 2012, BRF more than quadrupled its profits in the fourth quarter of 2012 from a year earlier after higher prices helped offset steep feed costs.

Brazil's poultry exports are expected to grow by about 3 percent this year as exporters bet on growth in Asian and African markets, which could further boost BRF's earnings.

BRF has started to write a new business plan through 2020, which will include input from the company's new board of directors, Chief Executive Jose Antonio Fay said last month.

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