June 12, 2019 / 2:37 PM / 6 days ago

Brazil unit of France's Casino to sell stake in appliance retailer for at least $578 million

SAO PAULO (Reuters) - French retailing group Casino’s Brazilian unit will sell its controlling stake in a Brazilian appliance retailer for at least 2.23 billion reais ($578 million), accepting a discount on the unit’s listed price as it refocuses on its supermarket business.

GPA SA, Brazil’s No.2 retailer and the biggest unit of Casino Guichard Perrachon SA outside of France, will sell its 36% stake in appliance and furniture retailer Via Varejo SA at a maximum 5% discount to Tuesday’s closing price, according to a filing.

GPA shares surged nearly 3% in Sao Paulo trading as investors cheered the move to finally unload the loss-making appliance unit, which it had struggled to sell since 2016.

In the same Wednesday filing, Via Varejo said its second-largest shareholder, retail veteran Michael Klein, agreed to pay up to 4.75 reais per share at auction, the same 5% discounted price that GPA accepted.

Klein has recruited about eight stock funds to participate in the auction, according to a person familiar with the talks. He is ready to contribute between 500 million reais and 800 million reais, said the source, requesting anonymity because the negotiations are confidential.

Analysts at Itau BBA said the deal would help GPA focus on food and get a market valuation more in line with its peers.

“For Via Varejo, given the extremely challenging scenario that the company has been facing from an operating perspective, we believe that a change in the controlling group will open a window for a potential turnaround process,” the analysts wrote in a note to clients.

Sao Paulo stock exchange operator B3 said the auction of Via Varejo shares would be held on Friday.

Via Varejo shares fell 2.6% on Wednesday to 4.87 reais, approaching the maximum discount accepted by GPA.

Reporting by Carol Mandl and Ana Mano; Additional reporting by Tatiana Bautzer and Paula Laier; Writing by Brad Haynes; Editing by Bernadette Baum

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