Brazil’s Ethanol King Sells $1.5 Billion Vale Stake to Cut Debt
Cosan SA, led by billionaire Rubens Ometto, sold its 5% stake in mining giant Vale SA for nearly $1.5 billion to reduce debt. The sale comes amid high interest rates in Brazil and lower profits from its sugar and ethanol business. The decision, under CEO Marcelo Martins, marks a shift away from mining to focus on financial discipline and growth.
Billionaire Rubens Ometto’s conglomerate Cosan SA is giving up its stake in mining giant Vale SA, ending its bet on a mining investment in order to pay down debt.
Cosan sold 173 million shares in a deal worth nearly 9 billion reais ($1.5 billion), the company said. It paid about 66.70 reais a share when it purchased its 5% stake in 2022, higher than the 52.6 reais per share it was trading in the B3 Exchange when the deal was announced on Thursday.
The company is contending with high interest rates in Brazil that will keep rising, and lower profits from its sugar and ethanol business. It has been struggling with debt since it acquired a stake in Vale in 2022.
“The current level of interest rates requires us to reduce Cosan’s leverage,” Ometto said in a statement. “The focus must be on financial discipline so that we can continue to grow.”
Shares of Cosan were up 1.9% at 2:16 p.m. in Sao Paulo after climbing as much as 8.6% earlier on the trading session. Vale was up 0.1%. Cosan shares have been trading at the lowest level in about five years.
Investors had been skeptical that Cosan, which has spread into everything from lubricant production and gas stations to rail transportation, would be able to find synergies with a mining company. Cosan has explored various options to improve its finances, including an IPO of its lubricant unit last year, but nixed the plan due to lack of investor interest.
The sale is the firm’s first major decision under Chief Executive Officer Marcelo Martins, who was promoted as part of a management overhaul in October. The company had been mulling a Vale sale since last year, sources said at the time. Valor Economico reported earlier that the sale was coming.
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Source : Live Mint
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