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December 25, 2009

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Bunge buys into sugarcane mill

BUNGE Ltd said yesterday it is to pay US$896 million in stock to Brazil's Moema Par, giving the United States agribusiness giant a 60 percent share of the holding company's 15.4 million tons crushing capacity.

As a part of the deal, Bunge will become the owner of Usina Moema Participacoes SA, which owns one sugarcane mill and has interest in five other mills in Brazil.

Under the deal, Moema shareholders will receive about 7.3 million shares of Bunge including a payment of about US$36 million as working capital.

Bunge said based on its Wednesday close the deal is valued at US$896 million and includes about US$480 million of net debt.

Mergers and acquisitions have been gaining momentum in Brazil's sugar and ethanol sector since the credit crisis hit mills that took on too much debt in past years to leverage their expansion.

Bunge said in the coming weeks it may enter into agreements to secure some or all of the remaining interests in the mills that constitute the Moema Group and expects these transactions to add to its earnings per share in the first 12 months.

Moema, 35 percent of which is owned by Brazilian sugar and ethanol tycoon Maurilio Biagi Filho, is also being considered by Brazilian cane milling rivals Cosan, Sao Martinho and Acucar Guarani, according to a report by local newspaper Valor Economico.


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