BRAZIL: Raizen not interested in buying Bunge assets

Published: 02/27/2018, 9:43:24 AM

Whoever may be acquiring Bunge's sugar assets, potentially ahead of the trading giant's purchase by Archer Daniels Midland, it does not look like being the world's biggest maker of the sweetener, Raizen Energia, according to Agrimoney.

Brazil-based Cosan, which owns Raizen Energia in a joint venture with Shell, downplayed the potential for a takeover of Bunge's sugar arm - or indeed any other business in the sector.

"We are not in the mood for consolidation in the sector," said Guilherme Machado, Cosan investor relations officer.

While Raizen Energia had last year paid US$250 million to purchase two sugar mills owned by Tonon Bioenergia, which struck the deal as part of a restructuring plan, that broke through a "very tough firewall" to get internal approval.

"It met several criteria," Machado said.

"We saw in Tonon a very good opportunity, we made it."

"Any other deals, we don't have in our radar so far," he told investors, while flagging that Raizen Energia, as the sector's biggest operator, sees "every single deal".

 Machado added that this lack of interest in bidding related to both Bunge's sugar production arm and the trading business, which look like being disposed of separately.

Bunge said earlier this month that it had "prepared the [cane] milling business for financial separation", while was "in advanced discussions" over an exit from sugar trading.

Machado's comments came in reply to a question from HSBC analyst Alexander Falcao on possible ramifications of an ADM takeover of Bunge that has been reported as being under consideration.

"ADM clearly states that they don't want anything to do, first, on the trading side, second on the sugar production side," Falcao said.

Separately, on Monday ADM - while reportedly in negotiation to buy Bunge, one of the other members of the "ABCD" group of world ag trading giants - revealed a joint venture with another, Cargill.

The joint venture would own and operate a Cargill soybean crushing facility in Borg Al-Arab in Egypt which is currently being doubled in capacity to 6,000 tonnes a day.

"Egypt is an important market where demand for high-quality soybean meal and oil is outpacing the rest of the world," said John Grossmann, ADM's head of oilseeds crushing in the Europe, Middle East and Africa region.

The US Department of Agriculture estimates Egypt's soymeal consumption in 2017/18 at 3.10 million tonnes, gaining 4.0% year on year for a 13th successive year of gains, a period over which use has tripled.