Brazilian Pulp Maker VCP Takes Control of Aracruz
Jan. 21, 2009 - Brazilian pulp producer Votorantim Celulose e Papel (VCP) yesterday agreed to take over rival Aracruz Celulose in a deal that could reach 5.4 billion reais ($2.28 billion) to create the world's largest short-fiber pulp producer, according to a Reuters news report.
The deal came after Aracruz restructured $2.61 billion of debt with a group of banks, capping nearly two years of negotiations.
The combined company would control 12% of the global pulp market and have annual output of 5.8 million metric tpy.
According to Reuters, VCP agreed to pay 2.71 billion reais in six installments to double its stake in Aracruz to 56%, adding that “the deal has the backing of Brazil's state development bank BNDES, a major Aracruz shareholder, which will inject 2.4 billion reais into the new company to help fund the takeover.”
"We have always believed in this transaction despite the (crisis) in markets," said Raul Calfat, general manager of VCP parent Votorantim Industrial, at a news conference. "It will bring lots of gains for both companies."