Regulator clears Brazil agribusiness’ takeover of railway

Brasilia | Reuters — Brazil’s antitrust regulator Cade on Wednesday approved the takeover of the country’s main railway operator America Latina Logistica SA by Cosan Logistica SA, with restrictions to protect against unfair market advantages.

The lead Cade investigator on the case, Gilvandro de Araujo, said restrictions on the merger would include guarantees of third-party access to Cosan’s two dry bulk terminals at Santos, Brazil’s biggest port.

The restrictions are aimed at addressing concerns of sugar and grain producers and traders who fear the deal will create a monopoly on railway access to the port of Santos.

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Araujo also said executives of Cosan SA, the sugar and ethanol producer that belongs to the same industrial group as Cosan Logistica, would not be allowed to take management positions at the merged company.

Shares of ALL and Cosan Logistica both rose up to 12 per cent in early trade as Cade officials met, but pared some of those gains to trade up eight per cent and seven per cent, respectively, in late afternoon. Shares for both companies are trading near their highest levels since December.

Analysts at Bank of America Merrill Lynch said the merger, expected to create a logistics company worth 11 billion reais (C$4.84 billion), will benefit both ALL and Cosan and that the restrictions imposed were in line with expectations.

The merger will also close the door to a long-standing legal battle between the two companies over contracts to deliver Cosan’s sugar over ALL track.

Cade said the company will need to create a supervisor to oversee fair access to services of potential rivals of companies in the Cosan Ltd. group.

Marcos Lutz, the chief executive of Cosan SA, said the restrictions will not impede the company’s ability to grow and invest in the sector.

— Nestor Rabello reports for Reuters from Brasilia. Additional reporting for Reuters by Paulo Laier; writing by Reese Ewing.

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