Brasil Foods Gains as Diniz Nominated Chairman: Sao Paulo Mover
BRF-Brasil Foods SA (BRFS3), the country’s largest food maker, rose the most in six months after its board nominated as its chairman Abilio Diniz, the chairman of Cia. Brasileira de Distribuicao Grupo Pao de Acucar.
Brasil Foods advanced 3.6 percent to 43 reais at 1:23 p.m. in Sao Paulo after earlier rising 4.6 percent, the biggest intraday gain since Aug. 21. Pao de Acucar, Brazil’s largest retailer, fell 1.7 percent to 95.68 reais. The benchmark Bovespa index added 0.3 percent.
The board of Brasil Foods appointed the new members yesterday and will submit their names to a vote at a shareholders’ meeting on April 9.
“This is positive news for Brasil Foods, as Mr. Diniz is extremely experienced in the retail sector,” Ricardo Boiati, Alan Cardoso and Pedro Bueno, analysts at Banco Bradesco SA (BBDC4)’s brokerage unit, wrote in a note to clients published today. They have a recommendation on the stock equivalent to a buy, with a 12-month target price of 45.10 reais.
While Pao de Acucar is one of Brasil Foods’s largest customers, the two companies produce some competing products.
Saint-Etienne, France-based Casino Guichard-Perrachon SA (CO), which gained control of Pao de Acucar last year, asked Diniz this week to step down as chairman, citing an “obvious conflict of interest” that Diniz, 76, denied.
“The shareholders’ agreement states that I am entitled to the lifetime post of chairman,” Diniz said in a statement.
Brasil Foods has gained 1.9 percent this year while the Bovespa has slumped 7.6 percent during the same period. Pao de Acucar has gained 5.5 percent.
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