The Brazilian company Votorantim Celulose (VCP) announced Tuesday (1/20/09) that it has acquired 28.03% of the voting capital of Aracruz Celulose (NYSE:ARA) at a cost of U.S. $2.71 billion, becoming one of the main shareholders in the company. VCP may buy another equally sized share in the coming days, which would make VCP the majority shareholder of Aracruz and transform the group into the largest producer of paper and pulp in the world. The BNDES (the National Bank for Economic Development) will disburse up to $2.4 billion to help execute the acquisition.
The agreement was signed yesterday by the Lorentzen, Moreira Salles and Almeida Braga families. VCP will pay as follows: U.S. $500 million up front, three packets of $500 million paid in July 2009, January 2010 and July 2010, $400 million in January 2011 and U.S. $300 million in July 2011.
VCP will take full control og Aracruz if Arainvest Investments (owned by the Safra group), which owns the other 28.03%, confirms a right of sale agreement signed in 2003 with the three families. In that agreement, it was stated that a buyer would also have to buy Araninves's share under the same conditions.
If this occurs, VCP will have to hold an IPO (Public Offering of shares) to raise their capital up to U.S. $4.254 billion.
The agreement already had already been set last year. But the financial crisis caused serious problems with derivatives exchange for the two companies, which caused a delay in the deal.
You can find more information about VCP on our Companies Page.