* ALL would hold 63.5 percent equity in new company
* Cosan's Rumo would name most of the board, have control
* Rumo pricing ALL shares at premium of 56 percent
By Reese Ewing and Roberta Vilas Boas
SAO PAULO, Feb 24 Brazilian sugar and ethanol
firm Cosan SA proposed on Monday to take over America
Latina Logistica SA in a $4.7 billion deal that would
form Latin America's largest railway and logistics company.
The planned takeover, which Cosan officials expect ALL's
board and shareholders to approve, would create a new logistical
giant in a country where access to cheap transportation
infrastructure comes at a premium.
By creating a bigger player in the sector that is still
underdeveloped by Cosan, chairman and controlling shareholder
Rubens Ometto will further his conglomerate's interests ranging
from agribusiness to fuel distribution. Under the terms of the
deal, shareholders of ALL, as America Latina Logistica is
commonly known, would own most of the capital of the combined
entity, while Cosan would name most of its board members.
"We think the operational integration of ALL and (Cosan's)
Rumo could result in quick wins due to asset turnover
optimization to transport sugar, ethanol and soybeans," UBS
Securities analyst Victor Mizusaki wrote in a client note.
In a separate securities filing, ALL said the combined value
of the new company would total 10.96 billion reais ($4.7
billion), of which ALL shareholders would hold 63.5 percent.
Cosan is proposing to value ALL shares at 10.184 reais per
share, a 56 percent premium to its closing price on Friday.
The new company will merge ALL's assets into Cosan's Rumo
Logistica SA unit. Cosan will spin off the logistics unit and
list its shares on the Sao Paulo exchange, Cosan said in a
"Rumo is a cash generator, so the resulting company will
have good cash flow," Cosan Chief Executive Officer Marcos Lutz
said in a call with investors.
ALL shares soared as much as 14 percent in São Paulo
trading, while Cosan gained as much as 5.6 percent. That helped
pare back ALL's 28 percent drop over the past year and Cosan's
21 percent decline in the same period.
Shares of Cosan closed at 36.60 reais, up 3.5 percent on
Monday. ALL closed 8.9 percent higher at 7.10 reais.
BOOST TO RAIZEN VENTURE
The railway assets of ALL would also add value to Cosan's
50-50 joint venture with Royal Dutch Shell Plc known as
Raizen, which is the main competitor of state-run oil company
Petróleo Brasileiro SA in fuel distribution in
"ALL is a unique asset. Rail is the most efficient, in terms
of costs, to transport in an area where there are no waterways,"
President Dilma Rousseff has struggled over the past years
to expand Brazil's aging port terminals and railway capacity,
despite the country's prowess as a key supplier of many of the
world's commodities such as sugar, coffee, soybeans, orange
juice and meats.
The move follows a long struggle by Cosan to find a way to
combine its logistics assets with ALL, which for years was the
largest railway operator in Latin America. Cosan relies on ALL
to transport much of its sugar to port in Santos.
Ometto attempted in August to buy a controlling stake in ALL
but was rebuffed by the company.
Lutz said that if ALL approves the deal, which he expects,
the capacity contract that Rumo holds with ALL to transport its
sugar to port would end. The contract has been the focus of a
legal dispute between the two companies after ALL stopped
transporting Rumo's sugar, driving up its freight costs.
ALL said it stopped service because Rumo had ceased payments
on the contract. A merger may offer a way out of the costly
lawsuits that would otherwise be fought out in the courts.
Cosan will also list the shares of Cosan Energia SA, a unit
that houses Cosan's sugar and ethanol, fuel distribution,
natural gas distribution, lubricants and land management
divisions, the filing added.