March 27, 2018 / 12:56 PM / 2 years ago

Amazon in talks with Casino over Brazil electronics chain: source

SAO PAULO (Reuters) - Inc (AMZN.O) and Casino Guichard Perrachon SA (CASP.PA) are negotiating a deal in Brazil either partnering or selling the French retailer’s local appliance and electronics chain, a source familiar with the talks said on Tuesday.

FILE PHOTO: The logo of Inc is seen in Sao Paulo, Brazil October 17, 2017. REUTERS/Paulo Whitaker/File Photo

The talks concerning Casino’s Via Varejo SA (VVAR3.SA) unit, which includes Brazil’s third-largest e-commerce operation and more than 900 stores in the country, would accelerate Amazon’s previously tepid advances into Latin America’s largest market.

The negotiation comes as the U.S. e-commerce leader and Casino have struck an agreement to sell groceries from the French group’s upmarket Monoprix through Amazon.

The Brazil deal, a more complex negotiation that has been discussed alongside the French partnership since January, could be structured using the same model or as an outright sale of Via Varejo, the source said.

News of the talks sent shares of GPA SA (PCAR4.SA), Casino’s Brazilian supermarket chain that owns Via Varejo, as much as 5.5 percent higher in Sao Paulo trading. Units of Via Varejo, which blend preferred and common stock, also rose up to 5.5 percent.

Via Varejo and Amazon representatives in Brazil declined to comment. Casino and GPA reiterated that they put a controlling stake in Via Varejo up for sale in October 2016, adding that the sale process is underway and there is no news to report at the moment. Casino also denied any partnership involving Via Varejo.

Via Varejo attracted little initial interest in 2016 as its then-traditional infrastructure kept costs high and hurt its bottom line. It has since expanded its e-commerce operations and turned a profit in four of the last five quarters.

Amazon has waded slowly into Brazil’s complex and highly competitive online retail market, starting with e-book sales in 2012, adding physical books two years later and offering third-party sales of electronics in October.

Reuters reported in recent months that the world’s largest online retailer has been preparing to ramp up its Brazilian presence, courting local suppliers of appliances and electronics and eyeing a large warehouse outside of Sao Paulo.

JPMorgan analysts told clients that a Via Varejo deal could be “a potential shortcut for Amazon expansion in Brazil, particularly by providing fulfillment capabilities that have been a key issue.” Via Varejo has some 26 distribution centers throughout Brazil.

Shares of Brazilian e-commerce rivals B2W Cia Digital (BTOW3.SA) and Magazine Luiza SA (MGLU3.SA) both fell around 3 percent on news of Amazon’s talks with Casino.

GPA and Via Varejo have sharpened their focus on e-commerce in recent weeks, replacing the chief executives of both companies in a move that will take effect in April.

In February, GPA said it would replace its CEO with Peter Paul Estermann, the current head of Via Varejo, who is credited with the electronics retailer’s digitally focused turnaround.

The top job at Via Varejo will go to Flavio Dias, who leads the company’s online division and has been described by the company as an e-commerce pioneer in Brazil.

Reporting by Tatiana Bautzer and Gram Slattery; Additional reporting by Flavia Bohone and Paula Laier in Sao Paulo; Writing by Brad Haynes; Editing by Daniel Flynn and Marguerita Choy

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