Brazilian sugar and ethanol producer, Cosan (CZZ) recenty announced signing of a sale and purchase agreement with Riccardo Arduini, Julia Dora Koranyi Arduini and GMI – Global Market Investments L.P.
As per the terms of the agreement, Cosan will purchase roughly 38.98 million shares of ALL – Am?rica Latina Log?stica S.A. for a total consideration of R$896.5 million. Of the total shares, a sum of roughly 34 million is related to an agreement signed between Riccardo Arduini, Julia Dora Koranyi Arduini and GMI – Global Market Investments L.P and other shareholders.
Completion of the transaction is subject to regulatory approvals along with other necessary approvals required for the transaction.
Am?rica Latina Log?stica, a Brazilian holding company, operates railway lines in Argentina and Brazil. The company specializes in providing transportation services including logistics, intermodal transport, port operations, movement and storage of merchandise, administration of storage facilities and general storage.
Cosan ranks third in sugar and fifth in ethanol production in the world, besides being the largest producer in Brazil. The company, apart from its core operations is also engaged in energy production from sugarcane bagasse and fuel distribution.
Of late, Cosan posted encouraging third quarter 2012 results with its net income rising more than 100% year over year to R$93.8 million (US$52.1 million). Cosan’s net operating revenue jumped 33.2% year over year to R$6,310.7 million (US$3,505.9 million). Encouraging results, however, were somewhat offset by higher cost of sales and adverse weather conditions that severely affected production in the quarter.
Longer term, we remain confident of Cosan’s performance on the back of promising growth opportunities. The company’s strategic acquisitions, growing sugar and ethanol demand, energy co-generation and transportation businesses seem to be the prime growth driving catalysts. Further, formation of Raizen is an added benefit.
We currently maintain an Outperform recommendation on the stock.
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