Market estimates place enterprise value, including debt, at approximately R$3bn ($518 million).
Contrary to the trend among its competitors in the agricultural commodities trading sector, Cargill has decided to expand its presence in the sugar and ethanol industry. The company announced it will take full control of SJC Bioenergia, which operates two sugar and ethanol mills in Goiás (GO), Brazil.
The American multinational, which has held a 50% stake in the business since 2011, acquired the remaining half of the joint venture. This stake was previously held by foreign currency bondholders of USJ, Cargill’s former partner in SJC.
The companies did not disclose the transaction value or comment on the deal. However, market estimates place the enterprise value, including debt, at around R$3 billion ($518 million), corresponding to a multiple of nearly $62 per tonne of cane processing capacity.
The transaction is subject to approval from Brazil’s Administrative Council for Economic Defense (CADE) and compliance with contractual conditions.
Over the past decade, many other commodity traders have sold off their sugar and ethanol mill stakes after facing significant losses. In 2023, Bunge sold its sugar assets to BP. Louis Dreyfus exited the sector in 2021, selling Biosev to Raízen. ADM sold its Minas Gerais mill to JFLim Participações in 2016.
Cargill had previously traded sugar through its Alvean joint venture with Copersucar, but the partnership was dissolved in 2021. Now, SJC Bioenergia will be Cargill’s only ethanol production business worldwide. The company also operates an ethanol dehydration plant in El Salvador, which processes ethanol produced in Brazil. In the sugar sector, Cargill owns one mill in Mexico and another in Russia and is currently building its first sugar refinery in the United States.
“Having SJC as a fully Cargill-controlled company is a significant reinforcement of our renewable energy growth strategy,”
said Paulo Sousa, CEO of Cargill Brasil, in a statement.
SJC Bioenergia, founded in 2006, operates a “flex” mill in Quirinópolis (GO), capable of processing both sugarcane and corn, as well as a sugarcane mill in Cachoeira Dourada (GO). Together, these two plants have a processing capacity of up to 9 million tonnes of sugarcane and 650,000 tonnes of corn per harvest. SJC also controls 130,000 hectares of sugarcane plantations, 60% of which are company-owned, and operates five grain storage facilities with a combined capacity of 235,000 tonnes. The company employs 4,500 people.
During its best harvest in history (2023/24), SJC processed 7.5 million tonnes of sugarcane, generating R$2.4 billion in revenue and a net profit of R$158.9 million. The company has not yet released data for the 2024/25 milling season, which ends March 31.
Source: Valor International
