SAO PAULO Aug 11 The Brazilian sugar and
ethanol unit of trader Bunge Ltd has requested approval
from antitrust watchdog Cade to buy out Itochu Corp's
20 percent stake in two cane mills co-owned by both companies.
According to a Bunge filing with Cade, the proposed
acquisition comes as the Japanese company seeks to exit a joint
venture in the sugar and ethanol mills Santa Juliana and Pedro
Afonso that dates back to 2008. Both mills are to be taken over
completely by Bunge, which prior to the deal owned 80 percent of
The two companies, at the time the partnership was announced
six years ago, said they would invest $800 million in the
project. The value of the latest deal was undisclosed.
According to the document, Itochu is exiting the Brazilian
cane sector because of "uncertainty over the future
profitability" of the milling projects and the "adoption of
government policies for combating inflation" through the control
of fuel prices. Brazil's government in recent years has
suppressed domestic fuel prices, hampering the profitability of
ethanol projects in the country.
Bunge, which became one of Brazil's largest crushers of cane
over the past decade through acquisitions and construction of
new mills, said late last year that it was weighing options to
optimize shareholder value from its Brazilian sugar and ethanol
division, including divesting if warranted.
Bunge in the second quarter posted a $6 million profit in
its sugar and bioenergy segment, compared with a year-earlier
loss of $3 million. The company said the strategic review of its
Brazilian sugar cane milling business, which it has been trying
to sell since late 2013, was progressing.
(Reporting by Reese Ewing in Sao Paulo and Tom Polansek in
Chicago; editing by Matthew Lewis)