After four years of twists and turns, paper Excellence’s acquisition of Eldorado, Brazil, has made new progress recently.
On February 4, local time, paper excellence announced that the arbitration court of the Brazilian international chamber of Commerce (ICC) made a ruling in support of paper excellence in the case of J & F investmentos SA (the parent company of Eldorado Brasil Celulose). According to the ruling, paper excellence can continue to acquire all the remaining shares of Eldorado Brasil. After the acquisition, it will hold 100% of Eldorado.
On September 2, 2017, Eldorado company of Brazil announced in the market that J & F investmentos, the major shareholder of the company, agreed to sell all its shares in the company to Ca investment SA, a subsidiary of paper excellence. According to Eldorado’s announcement, the company’s purchase price at that time totalled 15 billion Brazilian reais (about $3.61 billion at that time), which can be adjusted according to working capital and net financial debt at completion.
On September 25, 2017, CA acquired about 13% of Eldorado shares held by J & F.
On December 12, 2017, CA acquired about 33.46% of the shares of Eldorado held by FIP Florestal. As of February 15, 2018, CA held about 49.41% of Eldorado’s shares.
According to the terms of the transaction, both parties can complete the transaction within one year from the date of signing the agreement.
However, on September 4, 2018, Eldorado announced that J & F, the majority shareholder, terminated the previous agreement with paper excellence to sell the remaining 50.59% of its shares, on the grounds that the original transaction period was one year and the closing date of the transaction was September 3, 2018, beyond which the transaction cancellation clause was triggered.
Then, the two sides launched a fierce dispute over the agreement, accusing each other of not complying with the agreement, and Ca investment filed an arbitration request with J & F.
Eldorado has a pulp mill in tr ê s Lagoas, South Mato Grosso, Brazil, which produced 1.8 million tons of pulp in 2019, according to paper excellence. The brand of the company’s wood pulp products is “bull”, 90% of which are exported, about half of which are exported to the Chinese market. According to the company’s plan, a pulp line with an annual output of 2.5 million tons will be built in the future, making the total capacity exceed 4 million tons. In addition, according to the company’s past reports, the company has about 50 million hectares of Eucalyptus forest reserves in Brazil.
Paper excellence is affiliated to Indonesia app, the world’s largest papermaking enterprise. It was registered in the Netherlands in 2008, specializing in the production of wood pulp for papermaking, and has production plants in Canada, France and other places. With pulp and paper mills in Canada and France, and with the merger of Eldorado, paper excellence will have about 7000 employees worldwide and an annual capacity of 5.3 million tons of pulp and paper.
No matter for paper excellence or Eldorado, the Chinese market is a very important region. According to the public data of the State Administration of market supervision and administration, in the year before the agreement was reached, the global turnover of Eldorado in 2016 was 5.65 billion yuan, and that of China was 1.75 billion yuan. In 2016, the global turnover of paper excellence was RMB 9.03 billion, and that of China was RMB 2.91 billion.
Although the acquisition has not yet been completed, the State Administration of market supervision and administration of China once assessed the impact of the acquisition on market competition in 2018. The assessment concluded that the concentration of operators will not have the effect of excluding and restricting competition.
Post time: Feb-22-2021