-- Major portfolio optimization milestone for Bunge.
-- Brings together established industry players with complementary assets and experience in one of world's largest fast-growing biofuels markets.
-- Creates highly-efficient producer of ethanol and low-carbon biopower, with opportunities for synergies, operational improvements and future growth.
Bunge Limited a leader in agriculture, food and ingredients, has announced an agreement with BP plc to form a 50:50 joint venture that will create a leading bioenergy company in Brazil, one of the world's largest fast-growing markets for biofuels.
Bunge will receive cash proceeds of $775 million in the transaction, comprising $700 million in respect of non-recourse Bunge debt to be assumed by the joint venture at closing, and $75 million from BP, subject to customary closing adjustments. The proceeds will be used to reduce outstanding indebtedness under the Company's credit facilities, resulting in a stronger balance sheet and greater financial flexibility.
The deal progresses Bunge's strategy to optimize its portfolio. Gregory A. Heckman, Bunge's Chief Executive Officer, said, "This partnership with BP represents a major portfolio optimization milestone for Bunge which allows us to reduce our current exposure to sugar milling, strengthen our balance sheet and focus on our core businesses. We have a strong, committed partner in BP, as well as flexibility in the medium and long term for further monetization, with full exit potential via an IPO or other strategic route."
The joint venture, to be called BP Bunge Bioenergia, will operate on a stand-alone basis, with a total of 11 mills located across the Southeast, North and Midwest regions of Brazil. With 32 million metric tonnes of combined crushing capacity per year, the joint venture will have the flexibility to produce a mix of ethanol and sugar. It will also generate renewable electricity - fuelled by waste biomass from the sugar cane - through its cogeneration facilities to power all its sites and sell surplus electricity to the Brazilian power grid. BP and Bunge's assets are largely complementary, with sites in five Brazilian states including three in the key region of São Paulo. The combined business will be ranked the second largest player in the industry in Brazil by effective crushing capacity.
Dev Sanyal, chief executive of BP Alternative Energy, said: "Biofuels have a key role to play in the energy transition and Brazil is leading the way by developing this industry at scale. In one step, this agreement will allow BP to significantly grow the size, efficiency and flexibility of our biofuels business in one of the world's major growth markets. With our shared commitment to safety and sustainability, the combination of BP and Bunge's assets and expertise will allow us to improve performance, develop options for growth and generate real value. BP Bunge Bioenergia will be well-placed to play a significant part in meeting Brazil's growing demand for both biofuels and biopower."
Following completion, the aim is for BP Bunge Bioenergia to generate significant operational and financial synergies, including through scale efficiencies and by applying best practices, optimised technologies and operational capabilities across all the assets of the new business.
The new business is expected to be headquartered in Sao Paulo. Mario Lindenhayn from BP will be Executive Chairman, Geovane Consul from Bunge, will be Chief Executive Officer (CEO). BP and Bunge will have equal representation on the Board of Directors.
Approvals and Closing Timeline
The transaction has been unanimously approved by the Board of Directors of Bunge. Closing of the transaction is expected in the fourth quarter of 2019, subject to customary conditions, including receipt of required regulatory approvals.
Itaú BBA is acting as exclusive financial advisor to Bunge, and Lefosse Advogados is acting as legal counsel.
About Bunge Limited
Bunge is a world leader in sourcing, processing and supplying oilseed and grain products and ingredients. Founded in 1818, Bunge's expansive network feeds and fuels a growing world, creating sustainable products and opportunities for more than 70,000 farmers and the consumers they serve across the globe. The company is headquartered in New York and has 31,000 employees worldwide who stand behind more than 360 port terminals, oilseed processing plants, grain silos, and food and ingredient production and packaging facilities around the world.
For more information, please visit: www.bunge.com
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GISEC, the main exhibition and cyber security conference of the Middle East, Africa and Asia, counted this year with a greater presence of Brazilian companies doing business. In untraditional markets, the searches are for solutions in the areas of Information Security and the formation of Corporate Intelligent Networks.
Senhasegura is a company from MT4 Group which develops and provides a digital password vault for privileged access protection. The vault aims to ensure corporate sovereignty over critical actions and information, and also acts against data theft and enables the traceability of administrators' actions on networks, servers and databases to meet PCI, SOX and ISO 27001 regulatory requirements. In 2015, the brand received the CERTICS innovation seal issued by the Brazilian Ministry of Science and Technology and Innovation.
Listed in the Gartner Market Guide for Privileged Access Management in 2016 and 2017, the company was appointed in 2018 as a 'visionary' in the Gartner PAM Magic Quadrant, and was recognized the same year by Forrester as one of the world's leading PIM solutions in the its Forrester Wave report. Both institutes provide independent assessments of market solutions.
"It is vital for companies to meet international standards that attest to quality in solutions and customer relationships. We have already been recognized by Gartner as a "Visionary" and "Beat the Brand" supplier in 2018. And we will broaden that confidence in the global marketplace. For almost a decade our focus has been to work on preventing data theft and traceability in networks, servers, databases, and many other types of devices. We meet exacting standards, so we are also demanding," says Marcus Scharra, CEO of MT4 Group.
The entrance of the Brazilian group in the Middle East occurs by MT4: Senhasegura, with one of the main in privileged access management solutions in Brazil, which already serves its clients locally. During GISEC in Dubai, they signed a business agreement so that RAS Infotech - one of the main distributors among five countries - represents the solutions of the MT4 Group: Senhasegura in the Middle East region. According to executives, the objective is to promote the next generation of PAM Solution (Privileged Access Management), with local technical assistance.
Another expanding market for the Brazilian technology group is Southwest Asia. From Bangladesh, the company OneWorld InfoTech now provides full-cycle management solutions to high-privilege credentials, as well as modules for managing digital certificates, of interest to companies that work with their customers' sensitive data, and are concerned about the increase in theft and cyber fraud.
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