Ipiranga, a subsidiary of Brazilian fuels and petrochemicals group Ultrapar, has agreed to buy Chevron’s Texaco-branded fuel business in Brazil, the latest in a flurry of deals in the sector.
The US$730 million deal was announced on 14 August, transferring control of 2,000 service stations across Brazil, as well as equity interests in the fuel terminals which serve them, and Chevron’s commercial and industrial fuels business.
Marcelo Viveiros de Moura, a partner with Chevron’s counsel Pinheiro Neto Advogados, says, “This deal, together with the sale of the Exxon downstream business to Cosan and the sale of Ipiranga to Ultra, entirely changed the fuels distribution market in Brazil, with the entry of new local players to compete with Petrobras in that market, replacing traditional multinational oil companies.”
“The fact that they acquired such large assets from some of the most important companies in the world shows how much the Brazilian business environment has evolved in the last few years,” he adds.
The deal is expected to close in early 2009, to allow Chevron to separate its fuel distribution concerns from its lubricant and oil exploration activities, which are not being sold.
Ipiranga is the second largest fuel distributor in Brazil, with Texaco the fourth. The company will be licensed to use the Texaco brand name for up to five years, over which time the service stations will be gradually remarketed under Ipiranga’s name.
Counsel on the deal note that Brazil's M&A wave is continuing, despite global economic woes, with the country seeing over 600 M&A transactions in the past year with an aggregate value of over US$43 billion.
David Sonter, of Ultrapar’s counsel Freshfields Bruckhaus Deringer LLP, says, “As in this case, the bulk of Brazilian M&A tends to be domestic in nature, but much of the ebullient mood in Brazilian M&A results from the country’s ability to attract foreign capital, which in 2007 and 2008 accounted for almost half of all disclosed deals.”
The acquisition takes Ipiranga’s network of service stations to nationwide coverage, comprising more than 5,000 service stations with a 23 per cent market share.
Counsel to Ultrapar
Brazil
• Machado, Meyer, Sendacz e Opice Advogados
Partner Carlos José Rolim de Mello and associate Fionna Tsu
US
• Freshfields Bruckhaus Deringer LLP
Partners David Crook, Charles Robinson, Chris Forsyth and Gregory May and associates Alanna Collins Stuart Goldberg and Steven Brinker
Counsel to Chevron
• In-house counsel - John Wyma and Michael Green
Brazil
• Pinheiro Neto Advogados
Partner Marcelo Viveiros de Moura
(Latin Lawyer 15.08.2008)