SAO PAULO Grupo Pao de Acucar Chairman Abilio Diniz said he did not violate his partnership with France's Casino by negotiating a merger with their rival Carrefour in Brazil without informing his partner, the weekly magazine Veja said on Saturday.

After newspapers reported that Diniz was in talks with Casino's French rival Carrefour to merge, Diniz and local investment bank BTG Pactual came forward this week with a plan to combine the local assets of Brazil's leading two retail companies.

Casino , the controlling shareholder in Pao de Acucar
-- Brazil's biggest retailer -- started arbitration against Diniz for allegedly violating a clause of their partnership contract by not informing Casino of his negotiations with Carrefour to merge.

In the interview with Veja, Diniz said he did not violate the terms of the partnership and hinted at a possible line of defense in arbitration against Casino's side of the argument.

The fact is that I saw the opportunity to buy part of (Carrefour's) the operations. I presented this idea to my partner, Jean-Charles Naouri at Casino, Diniz said. I talked with him about this in December at lunch in the (hotel) George V in Paris but he wasn't interested.

That was the last time that Naouri and he met, he said. Months later, Diniz said he was surprised by the leak of information about his negotiations with Carrefour.

Casino's Paris-based spokesman did not respond to calls for comment. The press representative of Diniz's holding company made no further comments to the Veja interview.

Last week, I went to Paris to try to meet with him to present the terms of the proposal. I waited around for 28 hours, from late Sunday to Tuesday morning, but he didn't want to meet, he said.

But Diniz also said that he had his first meetings with the controllers of Carrefour two years ago.

The opportunity of contributing to the recovery of the company attracted me a lot, he said. I have an enormous appreciation for the company. In 1967, I went to France and had a chance to meet Marcel Fournier, the founder of Carrefour. I copied a lot of what they did.

(Reporting by Reese Ewing and Guillermo Parra-Bernal; Editing by Xavier Briand)