Raízen is born with eye on acquisitions
Valor Econômico
The joint venture formed by Royal Dutch Shell, largest private producer of oil in the country, and Cosan S.A., the largest ethanol producer, begins operating under a new name on the market: Raízen - company with R$ 20 billion (US$ 11.8 billion) in assets and estimated earnings of R$ 50 million (US$ 29.4 million), the fifth largest company of the country, behind Petrobras, Vale, JBS and Telefônica, not including the banks. The choice of the name has nothing of Kabbalistic. It is the joining of root and energy (in Portuguese - raiz and energia). The new company, which will keep the strong Shell brand, already begins looking at assets in the distribution segment to consolidate its position in the vice leadership of the segment.
Vasco Dias, President of Raízen, said the company shall pursue the second position, fought inch by inch with the Ultra group, which withholds the Ipiranga and Texaco brands, already in the coming months. Besides joining the synergies between Shell and Esso (brand that shall disappear within the next 36 months), the company is looking at assets to grow. Assets available in the market, such as AleSat, with participation of nearly 5%, are on the radar of the company, found out Valor. The Midwest, North and Northeast regions are also on the focus of the group, with the acquisition of regional larger or smaller companies. In fuel distribution, Shell will prevail on the market, since surveys carried out among consumers indicate it is strong and preferred. They Are 4.5 thousand gas stations, 550 convenience stores and operation in 53 distribution terminals (see news report at the side).
Announced in February 2010, the joint venture between Shell and Cosan, with 50% of interest each, will be fully integrated by the end of this half. But since the approval of the operation by the European Commission in January, Raízen already starts taking steps as an independent company. With market value of US$ 12 billion and 40 thousand employees, Raízen incorporated a debt of US$ 2.5 billion. The company plans going public within the coming months and it is talking to risk rating agencies for the issue of bonds. Raízen has still not defined how much it intends to raise. Shell had already announced an investment of nearly US$ 1.6 billion in the new company.
In sugar and alcohol the plans are equally ambitious. In a privileged position for being the leader in the market, Raízen should focus on acquisitions, "Greenfield" projects and increase of the installed capacity of its current plants to increase the sugarcane crushing capacity from the current 62 million tons to 100 million tons/harvest, which will allow a leap in the production of sugar from the current 4 million to 6 million tons, of ethanol from 2.2 billion to 5.2 billion liters and of energy from 900 megawatts (MW) to 1,300 MW. The company sells 10 billion liters of alcohol. Vasco does not disclose how much should be invested.
With the merger of assets, the company has 23 plants (not including the recent acquisition of Zanin, about to be wrapped up) and it will increase the research on second-generation ethanol. Cosan, which remains with the control of the assets of lubricants, land businesses (with Radar), Rumo Logística and sugar brands in the retail, it has a 20-year contract with Raízen to provide logistics services and it negotiates the purchase of sugar with the new company to distribute in the retail.