SAO PAULO/PARIS, Feb 11 (Reuters) - French grocer

Carrefour SA on Tuesday proposed to take private its

Brazilian unit Atacadao SA, also known as Carrefour

Brasil, offering 5.3 billion reais ($920 million) in cash or

shares for the one-third stake it does not already own.

The unit operates Carrefour supermarkets and wholesale

stores under the Atacadao and Sam's Club brands, contributing

about 20% of the group's global gross sales.

"Delisting the company will allow it to manage operations

with more agility and enhanced focus on execution," Carrefour

said in a statement.

Under the proposal sent to Carrefour Brasil's management,

the French parent company offered to pay 7.70 reais ($1.34) per

share of the Brazilian unit, an almost 20% premium over Monday's

closing price. Minority shareholders would be entitled to

payment in listed shares of Carrefour, cash or both.

The deal could be worth some 5.3 billion reais at that

price.

Shares in Carrefour Brasil rose around 10% on Tuesday.

Carrefour owns about 67% of the Brazilian unit, controlling

the company together with Peninsula Participacoes, the holding

company founded by the late Abilio Diniz.

Peninsula supports the deal and has decided to select the

alternative to convert all its Carrefour Brasil stake into

Carrefour shares, according to the Carrefour statement.

Peninsula, also one of the largest shareholders of France's

Carrefour, directly holds about 7% of Carrefour Brasil.

Santander analysts including Ruben Couto said they believe

the offer undervalues Carrefour Brasil but that minority

shareholders' ability to block the deal are limited since

Peninsula is aligned with Carrefour.

"We see limited space for the deal not progressing,

though the valuation could potentially be adjusted for Carrefour

France to fully take Carrefour Brasil private," they wrote in a

note to clients.

The deal, which is pending approval from Carrefour Brasil's

shareholders, is expected to be finalized in the second quarter,

and would increase its earnings per share from the first year,

Carrefour added.

"We are convinced that this decision represents an excellent

opportunity for the group's capital allocation and will generate

sustainable value for our customers, employees, partners and

shareholders," Carrefour's Chief Executive Alexandre Bompard

said in a statement.

Instead of cash, Carrefour Brasil shareholders could also

choose to receive one Carrefour share for every 11 shares of the

Brazilian unit. The offer also included an option for

compensation in both cash and shares.

($1 = 5.7651 reais)