On the BSE, sugar refiner Shree Renuka Sugars (SRS) hit a 52-week high of Rs.220.85 on Wednesday after the company said it has entered into a definitive agreement to acquire Vale Do Ivai S.A. Acucar E Alcool (VDI), a Brazilian sugar and ethanol company.
Totally, about 10.90 lakh shares changed hands thus far during the day compared to a daily average volume of 8.74 lakh shares.
The acquisition includes two sugar and ethanol production facilities with a combined cane crushing capacity of 3.1 million tons per annum. A larger part of the sugarcane requirements at VDI are met through its own cultivation of more than 18,000 hectares of land on long lease.
In addition, VDI holds strategic stakes in several logistics assets including terminals for storage and loading of sugar and ethanol at the port of Paranagua.
The enterprise value of VDI is $240 million. SRS, a fully integrated manufacturer of sugar, power and ethanol, will acquire 100% of the equity capital of VDI for approximately $82 million and the balance is the assumed debt, which is to be repaid over 8 years.
Besides, VDI will spin-off its production facility in the State of Minas Gerais, where a third of its production is done, to the current shareholders of VDI as a consideration for the acquisition.
The acquisition has received approval of the leading creditors of VDI and the other remaining conditions are expected to be completed over the next 45 days. Motilal Oswal Investment Advisors is the Strategic Advisor to SRS for this acquisition.
Brazil is the largest producer and exporter of sugar, while India is the largest consumer of sugar in the world. The acquisition provides SRS an entry opportunity in Brazil and it plans to grow and expand its production base in the Centre-South region of Brazil to enhance its competitiveness in the global sugar business.
Shree Renuka Sugars will publish its audited financial results for the year ended September 30 next week.
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