Abu Dhabi’s Mubadala fund, Raízen are among those interested in assets

08/09/2022

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Bunge and BP created joint venture in 2019 — Foto: Divulgação

U.S.-based Bunge and British oil company BP have put up for sale the sugar-and-ethanol company BP Bunge Bionergia, a joint venture created by the two companies in 2019, sources say. With 11 sugar-and-ethanol mills and capacity to crush about 33 million tonnes, the deal attracted the interest of Abu Dhabi’s Mubadala fund and the giant Raízen, a partnership between Cosan and Shell, sources familiar with the matter say.

JP Morgan has been hired to advise on the sale of the company. The assets are valued between R$9 billion and R$10 billion, considering a price between $55 and $60 per tonne of crushed cane, according to a source in the sugar-and-ethanol sector.

This is not the first time that Bunge has tried to dispose of its sugar-and-ethanol business. Before creating the joint venture with BP, the U.S.-based agribusiness behemoth hired banks to sell assets in the sector.

The sale is still in the non-binding proposal phase, according to sources. In this phase, offers are received, but there is no exclusivity contract between the parties. Sources say any deal is unlikely to be cut before the elections, in October.

Initially, only Bunge wanted to sell its 50% stake in the business. In the last two months, however, BP has also decided to throw off its stake, people familiar with the matter say.

Raízen and Mubadala are said to be potentially interested in the whole business, but did not make an offer yet. The shareholders do not rule out selling the assets separately. The company’s mills are located in the states of Goiás, Mato Grosso do Sul, Minas Gerais, São Paulo and Tocantins, and have a crushing capacity of 32.4 million tonnes of sugarcane per harvest. In the harvest ending March 2022, BP Bunge Bioenergia’s net operating revenue totaled R$7.2 billion, with net income of about R$1.7 billion.

Raízen was among the groups interested in buying Bunge’s assets in the past, but the deal did not go forward. The largest sugar-and-ethanol company in Brazil, the joint venture between Cosan and Shell has a crushing capacity of over 100 million tonnes of sugarcane and 35 production units.

Last year, the group closed one of the largest M&A deal with the purchase of Biosev’s (formerly Louis Dreyfus) mills. Bunge and Louis Dreyfus, another giant in the sector, have made heavy investments in sugar and ethanol in Brazil, but have not obtained the return they expected from the deal.

Abu Dhabi’s sovereign wealth fund Mubadala is also looking at sugar-and-ethanol assets to verticalize its refining business in Brazil, sources say. Last year, the group bought the Landulpho Alves refinery (RLAM) in Bahia from Petrobras for $1.65 billion. The sovereign wealth fund raised earlier this year $322 million to invest in Brazil — last week, the fund made an offer for the control of the fast-food chain Burger King in the country.

BP and BP Bunge Bioenergia said they do not comment on market speculations. Mubadala, Raízen and JP Morgan also declined to comment.

In a statement, Bunge said it “continues to evaluate options to exit its participation in the sugar and bioenergy joint venture.” The company stresses in the statement that it is satisfied with the performance of the business, but the assets are not essential to the overall strategy of its business.

*By Monica Scaramuzzo — São Paulo

Source: Valor International

https://valorinternational.globo.com/