August 6, 2012 / 10:01 PM / 6 years ago

Diniz agrees to sell Pão de Açúcar holding stake to Casino

* French group Casino to gain majority of holding Wilkes

* Casino CEO took over as chairman of Wilkes in June

* Diniz can sell remaining stake from June 2014

SAO PAULO, Aug 6 (Reuters) - Abilio Diniz, chairman of Grupo Pão de Açúcar , agreed on Monday to sell part of his stake in the holding company controlling Brazil’s biggest retailer, the next step in handing control to French group Casino.

Diniz exercised an option to sell Casino a 2.4 percent stake in the investment holding company Wilkes for $10.5 million, giving the French retailer a majority in the holding company as laid out in a 2005 shareholder agreement.

Casino Chief Executive Jean-Charles Naouri took over in June as chairman of Wilkes and appointed a majority of Pão de Açúcar’s board of directors after a ownership spat last year with Diniz, whose father founded the Brazilian retailer.

With the handover, Casino has secured its hold on operations in a market that may soon overtake France as the group’s main source of revenue, as a buoyant Brazilian middle class helps offset weak growth in Europe. Brazil already represents about 44 percent of Casino sales and more than half its operating profit.

After exercising his first so-called put option under the Wilkes shareholder agreement, Diniz has the right to sell the rest of his 47.6 percent stake in the holding company to Casino between June 2014 and June 2022.

Diniz and Naouri’s decade-long relationship was shattered last year when the Brazilian tycoon tried to orchestrate a merger with Casino rival Carrefour.

Shares of Pão de Açúcar fell 1 percent in Sao Paulo on Monday, while the benchmark Bovespa stock index rose 1.9 percent.

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