17/05/2010 THE orange juice industry is buzzing with speculation that Brazils Big Four may
soon become the Big Three.
FOODNEWS sources in Brazil say that Louis
Dreyfus is in talks with the giant Brazilian chemicals to agro-industry combine,
Votorantim, to buy its Citrovita orange juice processing operation for around
US$400 million. These rumours have been in the air since December, but nobody
will confirm it, said FOODNEWS source.
According to FOODNEWS contacts,
the acquisition is being handled by Goldman Sachs in New York but Goldman Sachs
declined to comment. Neither Citrovita nor Louis Dreyfus was prepared to make
any statement on the matter.
The acquisition would make sense for both
Louis Dreyfus and Citrovita, as the latter has no presence in the US and is
currently not involved in NFC orange juice production, which is presently more
lucrative than FCOJ manufacture.
Votorantim is believed to be in urgent
need of liquidity after its currency hedging last year incurred losses estimated
at up to US$2.0 billion. It is also believed to have bet disastrously on the
price of oil, locking itself into high-priced supply contracts for the coming
year. The company has just raised BRL4.2 billion (US$1.8 billion) by selling a
50% stake in its bank, Banco Votorantim, to the largest government-controlled
lender, Banco do Brasil.
With Cutrale owning a 30% stake in Citrosuco,
any further consolidation in the Brazilian industry would put even greater
pressure on the countrys orange farmers, who have already taken legal action
against what they see as a cartel, and any sale would presumably be subject to
approval by Brazils anti-competition authorities.
FOODNEWS Friday
January 16 2009
|