Louis Dreyfus becomes Brazil ethanol heavyweight after takeover

28 October 2009 21:03  [Source: ICIS news]

HOUSTON (ICIS news)--Louis Dreyfus is now the world’s second-largest sugarcane ethanol producer, the Brazilian press reported on Wednesday, citing the trading firm's takeover of local sugarcane group Santelisa Vale.

The deal gives Louis Dreyfus control over some 40m tonnes/year of sugarcane capacity in Brazil, the reports said, adding that company now trails only Cosan, which has 60m tonnes/year of capacity.

The French trading group is expected to inject Brazilian reais (R) 800m ($460m, €313m) into the new company, the value of which is initially estimated at R8bn.

Louis Dreyfus will have a 60% controlling stake, while Santelisa Vale will own 18% of the company.

Santelisa creditors will hold a 13% stake and another 9% will go to prospective new investors, the reports said.

Louis Dreyfus could not be reached for comment.

The takeover points to a growing trend of consolidation in the sector under which heavily indebted groups are being taken over by those with deeper pockets.

Brazil’s top producer Cosan in March took over debt-ridden rival Novamerica, consolidating its position as the major supplier in the sector.

Santelisa was said to have more than R2bn in debt, which was renegotiated under the deal with Dreyfus.

Market participants predict that a handful of Brazilian producers will likely control half of country’s sugarcane capacity within the next five years.

Brazil is the world’s second-largest ethanol producer after the US.

($1 = €0.68, R1.74)

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By: William Lemos
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