In Brazil, integrated ethanol, sugar, and bioenergy major Raízen S.A. has announced that it has signed a commercial agreement to incorporate the assets of Biosev S.A., a Brazilian subsidiary of Louis Dreyfus Holding. The deal, which is subject to regulatory approval, includes nine production units strategically located in Brazil – six in the state of São Paulo, two in Mato Grosso do Sul, and one in Minas Gerais – with a total installed sugarcane processing capacity of up to 32 million tonnes.
One of the largest companies in Brazil in terms of revenue, Raízen is a 50:50 joint venture between global oil, gas, and energy major Shell and Cosan, a Brazilian conglomerate producer of sugar, ethanol, energy, and foods.
Raízen operates 26 sugar, ethanol, and bioenergy production units—and a 2G ethanol plant—with an installed capacity for processing 73 million tonnes of sugarcane, which in the 2019-2020 crop year produced approximately 2.5 billion liters of ethanol and 3.8 million tonnes of sugar.
The company owns 860 000 hectares (ha) of agricultural land and has 1 GW installed capacity for energy generation generating 21.1 TWh of electricity for export in the 2019-2020 crop year. The company has access to a network of more than 6 000 Shell filling stations in Brazil and Argentina.
Raízen has consolidated a fully integrated business model that enables it to offer its customers energy solutions within an increasingly clean and renewable energy matrix.
In line with the goal to lead the energy transition
This incorporation with Biosev’s assets, which includes power cogeneration with an export capacity of up to 1.3 GWh of electricity/year, and 280 000 ha of planted sugarcane, is in line with the company’s goal of leading the energy transition and “intersects perfectly with the current global agenda that is progressively moving toward a low-carbon economy.”
Further to the expansion of the production of ethanol, sugar, and bioenergy, this incorporation with Biosev, is an opportunity to leverage technology that drives productivity and the use of sugarcane in biorefineries, with the possibility of expanding our second-generation ethanol and biogas businesses, said Ricardo Mussa, CEO of Raízen.
According to Raízen, the global trend towards the increasing relevance of renewable sources is creating a positive environment for its businesses, which has been accelerated by the pandemic and leveraged by public policies, such as Brazil’s RenovaBio. This same trend resulted in increased prices of sugar in the international market.
Considering this current scenario, this incorporation with Biosev has the potential to help strengthen the entire sugar-energy production chain, solidify partnerships, and support suppliers. We want to grow together and generate shared value, while also incorporating a diverse and integrated team, that is guided and respects safety, which by the way is a non-negotiable value to us, Ricardo Mussa said.
The transaction, which is subject to certain conditions that must be met and approval by regulatory bodies such as CADE, involves an exchange of shares and payment in cash since Biosev’s assets will be consolidated net of debt.
Assuming the transaction is completed, Biosev will become a subsidiary of Raízen and its current shareholders will migrate to a holding company that will own a minority interest in the incorporated entity, without voting rights.
With this incorporation, Raízen would own 35 production units, with an installed processing capacity of 105 million tonnes of sugarcane, and approximately 1.3 million ha of cultivated land.
