SAO PAULO, Aug 11 (Reuters) - 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 venture.
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)