Raízen Closes US$1.42 Billion Sale of Argentina Business to Mercuria

BRAZIL · BUSINESS

Raízen has closed the US$1.42 billion sale of its Argentine operations to Mercuria, turning June’s agreement into cash for the biggest debt workout in Brazilian corporate history.

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From Signing to Closing in Three Months

Raízen, the sugar, ethanol and fuel-distribution joint venture between Cosan and Shell, announced on Tuesday, 1 September, that it has completed the sale of its Argentine operations to Mercuria Energy Group. The transaction, valued at R$7.3 billion (US$1.42 billion), was first signed on 4 June and closed after all precedent conditions were met, including the applicable regulatory approvals.

The final price remains subject to customary post-closing adjustments based on closing financial statements, with the net amount to be determined once those are concluded. Raízen said the net proceeds will go to managing its capital structure.

“The transaction is aligned with Raízen’s strategy of optimizing its asset portfolio, simplifying its operational structure and disciplined capital allocation, with a focus on priority markets and geographies,” the company said in its market notice. With the closing, Raízen no longer holds the Argentine operations, which had already been reported as a discontinued operation in its latest quarterly results.

What Mercuria Bought

The package is a strategic piece of Argentina’s fuel infrastructure. It includes the Dock Sud refinery in Buenos Aires province, responsible for about 14% of the country’s fuel production, and a network of 894 Shell-branded service stations holding 17.9% of the retail market — second only to state-controlled YPF, with 58.1%.

Also transferred: a lubricants plant in the city of Buenos Aires, aviation-fueling platforms at the Ezeiza and Aeroparque airports, and fuel terminals at Arroyo Seco and Santa Fe. The buyers — Latam Downstream Holdings and Silver Projects I, entities controlled by Mercuria — also assumed the debt of Raizen Argentina S.A.U.

For Mercuria, one of the world’s largest independent commodity traders, the acquisition scales up an Argentine bet it had already made upstream: the Swiss group operates in the Vaca Muerta shale formation through Phoenix Resources. Both there and in the Raízen deal, its local partner is José Luis Manzano, founder and president of Integra Capital, whose participation in the purchase was reported by Bloomberg Línea at signing.

One Piece of a Record Restructuring

The Argentina exit is the single largest divestment in Raízen’s extrajudicial recovery, a restructuring of about R$65 billion (US$12.6 billion) in debt — the largest of its kind in Brazilian corporate history. São Paulo’s 3rd Bankruptcy and Judicial Recovery Court homologated the plan in late July, after creditors representing 81.6% of covered claims signed on.

The plan converts 45% of restructured debt into equity at R$0.25 (US$0.05) per share and refinances the remaining 55% through new instruments split between the company’s two future units. Shell is injecting R$3.5 billion (US$680 million), and Aguassanta, the Ometto family’s investment vehicle behind Cosan, may add R$500 million (US$97 million).

Asset sales have run in parallel. In July, Raízen sold the Caarapó mill in Mato Grosso do Sul to Adecoagro for R$760 million (US$148 million); earlier disposals included the Leme mill for R$425 million (US$83 million) and the Rio Brilhante and Passa Tempo mills for a combined R$1.54 billion (US$299 million). Including smaller non-core assets, divestments had raised roughly R$5 billion (US$971 million) before the Argentina closing. The company now operates 23 mills with crushing capacity of about 69 million tonnes of cane per crop.

The pressure that forced the fire sale is visible in the numbers. Leverage reached 5.3 times net debt to EBITDA in the quarter ended December, far above the 2.0 to 2.5 times management considers healthy. Raízen posted a net loss of R$1.64 billion (US$318 million) in the April–June quarter, narrower than a year earlier, and its shares — at R$0.26 (US$0.05), down 68% this year — value the whole company at roughly R$2.68 billion (US$520 million), less than twice the price of the Argentine unit just sold.

What Comes Next

With Argentina off the books, Raízen’s reorganization enters its execution phase. By the end of 2027 the company plans to split into two independent units: Raízen Energia, housing sugar, ethanol and bioenergy, and Raízen Combustíveis, concentrating fuel distribution and Shell-branded lubricants. The plan’s full closing is scheduled for up to 31 March 2027 and remains conditioned on several factors.

Analysts caution that even billion-dollar sales do not, by themselves, fix the balance sheet. Citi wrote after the Caarapó deal that such disposals are positive for simplification but insufficient for meaningful deleveraging — a verdict that applies, at larger scale, to the Mercuria proceeds as well. Meanwhile, asset manager IG4 Capital, fresh from taking control of petrochemical maker Braskem, has proposed buying Raízen credits to lead the restructuring, adding a contest for influence over what emerges from the process.

For Mercuria and Manzano, the bet is the mirror image: Argentina’s fuel market, its second-largest refinery network and its shale boom, acquired from a motivated seller. Which side of the trade pays off first is now a matter of execution on both sides of the border.

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