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2014 Media Kit

Brazil’s Cosan proposes takeover of railway firm in $4.7 bln deal

Author: Reuters | Feb 24 2014 at 08:48 AM | Category: Intermodal  

Brazilian sugar and ethanol firm Cosan SA proposed on Monday a takeover of America Latina Logistica SA in a $4.7 billion deal that would form Latin America’s largest railway and logistics company.

Under the terms of the deal, shareholders of ALL, as America Latina Logistica is commonly known, would own most of the capital of the combined entity, while Cosan would name the majority of its board members.

In a separate securities filing, ALL said the combined value of the new company would total 10.96 billion reais ($4.7 billion), of which ALL shareholders would hold 63.5 percent.

The new company will merge ALL’s assets into Cosan’s Rumo Logistica SA unit, Cosan said in a securities filing. Cosan would pay a 56.2 percent premium for ALL, based on the latter’s closing price on Friday.

By creating a bigger player in an area that was still underdeveloped by Cosan, chairman and controlling shareholder Rubens Ometto is further boosting a conglomerate with interests ranging from agribusiness to fuel distribution and land management. The proposed merger comes as Brazil grapples with improving and expanding an aging infrastructure.

The move follows a long struggle by Cosan to find a way to combine its logistics assets with ALL, which for years was the largest railway operator in Latin America. Cosan relies on ALL to transport much of its sugar to port in Santos.

ALL shares soared 13.19 percent to 7.38 reais in morning trading on Sao Paulo’s stock exchange, while Cosan shares were up 2.35 percent to 36.19 reais. ALL is down almost 28 percent in the past year, while Cosan has shed about 21 percent in the same period.

Under the proposed deal, which has to be approved by the board and shareholders of ALL, Cosan will spin off its logistics unit known as Cosan Logistica and list its shares on the Sao Paulo exchange. The company will also list the shares of Cosan Energia SA, a unit that houses Cosan’s sugar and ethanol, fuel distribution, natural gas distribution, lubricants and land management divisions, the filing added.