Pão de Açúcar, Casas Bahia deal opens up split between Itaú Unibanco, Bradesco

Brazilian supermarket chain Pão de Açúcar's purchase of retailer Casas Bahia late last week should open competition between Itaú Unibanco (NYSE: ITUB) and Bradesco (NYSE: BBD), the respective finance company partners of the two companies. In August, Itaú Unibanco said it would pay 600mn reais (US$348mn) to get out of its side of an exclusive agreement with Pão de Açúcar, which is the country's largest retail group, but this deal also included a payment to extend the retailer's side of the deal until 2029. Last week, Itaú Unibanco again acted on its retail agreements, paying 250mn reais to extend its exclusivity at department store chain Magazine Luiza, also until 2029. Bradesco, for its part, has worked with Casas Bahia on finance and credit card deals since 2005. Pão de Açúcar has not decided how it will manage its possibly conflicting consumer finance arrangements. News service Agência Estado quoted executives of the firm saying they were free to choose between partners. However, any choice will certainly force the group to pay some sort of opt-out fee for prematurely ending the contract.