Brazilian conglomerate Cosan has acquired a 4.9% stake in iron ore producer Vale through one of its subsidiaries.
The deal was funded by a combination of credit lines, including the private issuance of commercial notes, and financing concerning derivative instruments.
It also includes a combination of direct investments (equity) and derivative operations.
The deal is part of Cosan’s plan to diversity its portfolio by investing in ‘irreplicable assets’ in sectors with clear competitive advantages in Brazil.
Controlled by Brazilian billionaire Rubens Ometto, Cosan will pay around R$21bn ($4.04bn) for the stake in Vale, which is the world’s second largest iron ore producer.
The company is also considering buying an additional stake in Vale and would immediately seek clearance from the Administrative Council for Economic Defense (CADE) for this.
In a press statement, Cosan said: “Until CADE’s decision, the company will be exposed to an additional and exclusively financial position of 1.6% of Vale’s equity through a derivative transaction that is different from the one used for the acquisition, which might be converted into direct acquisition with CADE’s approval.”
Cosan added that it would inform its shareholders and the market of any new developments around the deal.
The company’s stake in Vale is expected to reach 6.5% subject to approval from Brazil’s antitrust regulator.
By acquiring the stake, it is expected to gain potential synergies related to its logistics network, as reported by Bloomberg News.
Cosan entered the mining sector last year when it formed a joint venture (JV) with Grupo Paulo Brito, the founder and controller of mining firm Aura Minerals, for iron ore exploration and transportation.
The JV has secured exploration rights for mining assets in three mineral projects in Brazil’s northern region.
Earlier this month, Vale and German steelmaker Stahl-Holding-Saar (SHS) partnered to develop solutions for carbon-neutral steelmaking.