By Brazil Stock Guide – Raízen SA (RAIZ4), the world’s largest sugarcane processor, announced an agreement to sell two sugar mills in Brazil’s Mato Grosso do Sul state to rival Cocal Agroindústria for R$1.54 billion ($300 million). The transaction, first reported by Reuters and detailed in a company filing on Friday, is part of Raízen’s strategy to reduce leverage and improve operational efficiency.
The sale covers the Rio Brilhante and Passa Tempo mills, both located in the municipality of Rio Brilhante, with combined crushing capacity of about 6 million tons of sugarcane per harvest. The deal includes R$1.325 billion for the assets plus R$218 million in off-season maintenance costs, which Cocal will fully assume, the company said.
Focus on Debt Reduction
“The transaction is aligned with the company’s strategy of optimizing its asset portfolio, simplifying operations and capturing efficiencies, with a focus on improving profitability in its agro-industrial business,” Raízen said in a statement.
Raízen reported a net loss of R$1.8 billion in its most recent quarterly results, with net debt surging to R$49.2 billion. The company expects divestments such as this to ease its balance sheet and sharpen its focus on higher-return operations.
Reshaping the Portfolio
Following the completion of this and other announced asset sales, Raízen will operate 25 mills with a combined crushing capacity of about 75 million tons per year. Payment will be made in cash at closing, subject to customary adjustments for deals of this kind.
The deal is pending approval from Brazil’s antitrust regulator, Cade.
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