Noble confirms Brazil mills buy in $950 million deal

Noble Group (NOBG.SI), Asia's largest commodities trader, said on Monday it has signed a $950 million deal to purchase two sugar mills from Brazilian and ethanol group Cerradinho Holding.

The Singapore-listed firm told the bourse the two mills will increase Noble's total annual sugarcane crushing capacity to 17.5 million tones, after a Brazilian newspaper reported of the takeover bid last week.

The two mills that are being acquired, Catanduva and Potirendaba, are fully operational in Sao Paulo State in Brazil and are located about 100 kilometers from Noble's established UNP facility, Noble said in the statement.

Catanduva has a nominal sugar cane crushing capacity of 4.6 million tones and Potirendaba crushes 3.4 million tones per annum.

The two mills are expected to have a combined production of 600,000 tones of sugar, 300,000 cubic meters of ethanol and supply over 300,000 megawatt hour of electricity to the Brazil grid.

Mergers and acquisitions have accelerated since the 2008 global credit crisis left many mills in Brazil too indebted in the middle of ambitious expansion programs.

The situation left a handful of distressed players that had previously been considered overvalued.

Earlier this month, Swiss-based commodities trader Glencore GLEN.UL bought a stake in Brazilian ethanol plant Rio Vermelho, its first ever investment in the cane sector.

Noble has two cane mills in Sao Paulo state, a coffee processing plant in Minas Gerais and warehouses. In October, it inaugurated a grain terminal in the port of Santos.

source: reuters