BP agrees buyout of Brazilian biofuels JV at USD-1.4bn EV

British energy major BP Plc (LON:BP) has struck a deal to take full ownership of its Brazilian biofuels joint venture with US grain trader Bunge Global SA (NYSE:BG) which is associated with a daily capacity of around 50,000 barrels of ethanol equivalent produced from sugarcane.

The transaction concerns a 50% stake in BP Bunge Bioenergia and will be carried out at an enterprise value of about USD 1.4 billion (EUR 1.30bn), the parties announced in separate statements on Thursday.

Set up in 2019, BP Bunge Bioenergia operates an industrial-scale sugarcane and ethanol business with 11 mills located across the Southeast, North and Midwest regions of the country. The entity has a net debt of around USD 500 million and lease obligations of about USD 700 million.

“We are pleased with the way the business is operating. However, this business is not core to Bunge’s long-term strategy and this transaction will allow us to focus and invest in our core businesses while also further strengthening our balance sheet,” said Bunge’s CEO Greg Heckman. The seller expects net proceeds of about USD 800 million.

Meanwhile, the British firm noted it has decided to scale back plans for developing new sustainable aviation fuel (SAF) and renewable diesel biofuel projects at its existing sites in a drive to simplify its portfolio and focus on value and returns. It will also pause two potential projects but will continue considering three other possible schemes.

The buyout hinges on regulatory clearances and is set to close in the fourth quarter of 2024.

(USD 1 = EUR 0.934)

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