Brazil energy giant Raízen acquires controlling 50% share in Paraguay’s largest fuel distributor

RIO DE JANEIRO, BRAZIL – São Paulo-based Raízen, the third-largest Brazilian energy company by revenue, announced Tuesday (10) that it had acquired a 50% stake in Barcos y Rodados (B&R), the largest fuel distributor in Paraguay, for US$130 million. The deal will pay US$40 million at closing and US$90 million in five annual installments.

An agreement will be signed between Raízen and the current shareholders, providing that the Brazilian joint venture will have the right to appoint the officers and the majority of the board members of B&R and be entitled to a preferential dividend based on the company’s financial performance.

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According to the company, B&R is the market leader in fuel distribution in Paraguay, with a network of 350 service stations. Under the agreement, Raízen will sublicense its right to use the Shell brand to B&R, whose service stations will now operate under that banner.

“The completion of the transaction marks Raízen’s entry into the Paraguayan market for marketing and services and integrates the company’s South American business platform,” the company said.

WHO IS BARCOS & RODADOS?

The company Barcos & Rodados, which operates since 1990, has 320 service stations and a fuel terminal on the banks of the Paraguay River .

The group was founded by Miguel Ángel Ortega Arréllaga, father of businessmen Luis Ortega Echeverría and Miguel Ortega Echeverría, who are also owners of Hotelería Paraguaya SA (Awa Resort in Encarnación), the financial company FIC and other companies in the agricultural sector.

One of the partners of the group is Pedro Ballota, vice president of the Olimpia Club, who is responsible for the gas fractioning company Corporación Petrolera SA (Copesa). Other shareholders are Ortega family members, including Luis Ortega Echeverría, who is counted among the ten richest entrepreneurs in Paraguay.

RAIZEN IS ALREADY PRESENT IN ARGENTINA

Raízen is a joint venture formed in 2010 from the merger of Cosan and the Royal Dutch Shell subsidiary in Brazil; it has a market value of approximately US$20 Billion and revenue of about US$28 billion.

Raízen has a network of 7,000+ fuel stations under the Shell brand spread throughout Brazil and Argentina, more than 1,000 convenience stores, and ethanol production of over 2.2 billion US gallons (8,300,000 m3).

The group also has 26 ESB (ethanol, sugar, and bioenergy) plants, with a total crushing capacity of 62 million tons of sugar cane per year, while also boasting 940 megawatts of installed electric power capacity produced from sugarcane biomass (bagasse).

Many of these plants were inherited from Cosan at the creation of the joint-venture, while several others were acquired from competitors as part of an expansion strategy.

In the fuel trade business, Raízen trades approximately 31 billion liters per year in both B2B (mainly the transportation and industrial sectors) and B2C segments (through its network of 7,000+ fuel stations across Brazil and Argentina).