SAO PAULO, Dec 24 - U.S. agribusiness giant Bunge Ltd (BG.N) will buy Brazilian sugar and ethanol producer Moema for $452 million, its biggest bet yet on the fast-growing cane and ethanol industry in the world's top exporter.
The takeover, the second deal of its size in three months after Louis Dreyfus bought into the sector, is the latest in a wave of consolidation in Brazil's massive sugar industry, where heavily-leveraged mills struggling to cope with the global economic crisis are vulnerable to buyouts.
The deal will more than double Bunge's cane milling capacity in Brazil, where it has operated for a century and already has two mills and is building a third.
Under the terms of the deal, Moema's controlling shareholders will get 7.3 million shares in Bunge, which includes a $36 million payment for working capital.
The deal includes $480 million in debt owed by Moema Participacoes, as the Brazilian group's holding company is formally known.
"The fragile state which some groups were in is allowing a bigger influx of foreign capital and an increase in consolidation," said Plinio Nastari, president of Datagro, a sugar and ethanol consulting firm based in Brazil.
"High production costs this season, caused by the excess rains that hit cane yields, made the situation even worse for several groups," he added.
Bunge, a powerhouse grains trader, becomes a leading player in sugar with the deal, this year's hottest commodity.
It is the latest in a string of foreign companies to secure a stronger foothold in Brazil's sugar and ethanol sector, long dominated by family-owned firms reluctant to share ownership.
In October, French commodities group Louis Dreyfus unveiled plans to acquire Brazil's Santelisa Vale to create the world's second-largest cane processor.
Multinationals such as Cargill Inc [CARG.UL] and even oil majors like BP (BP.L) are investing in Brazil's cane industry, seeking to benefit from an expected surge in demand for biofuels like cane-based ethanol.
The takeover, the second deal of its size in three months after Louis Dreyfus bought into the sector, is the latest in a wave of consolidation in Brazil's massive sugar industry, where heavily-leveraged mills struggling to cope with the global economic crisis are vulnerable to buyouts.
The deal will more than double Bunge's cane milling capacity in Brazil, where it has operated for a century and already has two mills and is building a third.
Under the terms of the deal, Moema's controlling shareholders will get 7.3 million shares in Bunge, which includes a $36 million payment for working capital.
The deal includes $480 million in debt owed by Moema Participacoes, as the Brazilian group's holding company is formally known.
"The fragile state which some groups were in is allowing a bigger influx of foreign capital and an increase in consolidation," said Plinio Nastari, president of Datagro, a sugar and ethanol consulting firm based in Brazil.
"High production costs this season, caused by the excess rains that hit cane yields, made the situation even worse for several groups," he added.
Bunge, a powerhouse grains trader, becomes a leading player in sugar with the deal, this year's hottest commodity.
It is the latest in a string of foreign companies to secure a stronger foothold in Brazil's sugar and ethanol sector, long dominated by family-owned firms reluctant to share ownership.
In October, French commodities group Louis Dreyfus unveiled plans to acquire Brazil's Santelisa Vale to create the world's second-largest cane processor.
Multinationals such as Cargill Inc [CARG.UL] and even oil majors like BP (BP.L) are investing in Brazil's cane industry, seeking to benefit from an expected surge in demand for biofuels like cane-based ethanol.
