Bunge’s Expansion Binge in Brazil

Bunge Limited (BG - Snapshot Report), a leading global agribusiness and food company in the U.S., has recently acquired 100% ownership in Usina Moema Participacoes S.A., a holding company that wholly owns one sugarcane mill in Brazil and has ownership interests in five others. With the acquisition, Bunge has obtained approximately 60% effective share of the total capacity of the facilities, which altogether have an annual crushing capacity of 15.4 million metric tons. 

With the deal, Bunge has fulfilled its strategic goal of building a large-scale, fully integrated business in sugar and bioenergy. Brazil is also a fast-growing market for ethanol with the world's lowest-cost production facilities. The transaction, structured as a share exchange, is valued at approximately $896 million, including $480 million of net debt. Under the terms of the agreement, Usina Moema shareholders will receive about 7.3 million shares of Bunge. 

The acquisition enables Bunge to vary production volumes among multiple sugar and ethanol products, according to the market conditions. The mills of Usina Moema are located on the border of São Paulo and Minas Gerais states, the two largest domestic ethanol markets in Brazil. The facilities also have favorable road and rail access to Santos, Paranagua and Vitoria – three of Brazil's largest export ports. In addition, the mills have co-generation facilities and are self-sustaining in terms of energy requirements. Bunge expects the acquisition to be accretive to earnings in the first 12 months.

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