At 81, Brazilian Billionaire Diniz Still Has Something to Prove

(Bloomberg) -- Abilio Diniz, the contentious Brazil billionaire pushed out from the supermarket giant his father founded, is gearing up for his next big fight.

At 81, Diniz finds himself at the center of a new imbroglio after BRF SA, the poultry producer that he's chaired since 2013, posted a string of unprecedented losses. Top investors, including one-time Diniz allies, are now seeking to fire the retail magnate and the rest of BRF's board. 

Diniz said in a statement that while he “shares all shareholders' frustrations,” such a radical shakeup isn't the solution. “My role as chairman is, above all, to defend BRF's interests,” he said.

The stakes go beyond the future of the $7.4 billion food company; for Diniz it's personal. With a net worth of $3.4 billion, more than 1 million Facebook followers and two best-selling autobiographies that are half self-help and half management guide, Diniz has carefully constructed a reputation as one of Brazil's business greats. A back-to-back ouster coming on the heels of his 2013 exit from Cia. Brasileira de Distribuicao, the retailer known as GPA, threatens to tarnish what could be among the final chapters in his decades-long career.

“He misplayed his hand,” said Adeodato Volpi Netto, head of capital markets at Eleven Financial Research in Sao Paulo. “Being an icon alone isn't enough to run a business as complex” as BRF.

Diniz, who went to work for his father after college and turned the family bakery into Brazil's biggest retailer, set his sights on fixing BRF after leaving GPA following a very public battle with French supermarket chain Casino Guichard-Perrachon SA. In his 2016 book “New Paths, New Choices,” Diniz cited the multi year deal that eventually led to Casino taking control of GPA as the worst mistake of his life.

Diniz looked poised to show them all when he was named chairman of BRF with the backing of Brazil's biggest pension fund. He vowed to spur shares with a restructuring that would result in a leaner and more efficient food producer. Under his watch, BRF replaced the entire management twice over, while also struggling through Brazil's worst-ever recession and a national food-safety scandal. The stock tumbled 35 percent in dollar terms since he became chairman, making it the worst among global peers.

The final straw for shareholders came Feb. 22, when BRF reported a surprise fourth-quarter loss of 784 million reais ($242 million). Analysts had expected, on average, a 150 million-real profit. The 1.13 billion-real annual loss was the worst in the company's 25-year history.

Less than 48 hours later, pension funds Previ and Petros, which together own 22 percent of BRF, sent a letter requesting Diniz convene shareholders to vote on the replacement of board members, including himself. A board meeting has been scheduled for Monday.

A press official for Diniz declined to comment for this story.

While BRF's struggles aren't entirely Diniz's fault, his failure to understand the complexities of the commodities business and its differences with retail contributed, said Volpi Netto.

“They hired a soccer MVP to play volleyball,” Volpi Netto said. “What's it matter if the guy is Pele? He doesn't know how to play.”

--With assistance from Gerson Freitas Jr.

To contact the reporter on this story: Fabiola Moura in Sao Paulo at fdemoura@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Jessica Brice, Julia Leite

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