SAO PAULO (Reuters) - Controlling shareholders in Brazilian pulpmaker Fibria Celulose SA (FIBR3.SA) have agreed to merge the company with rival Suzano Papel e Celulose SA (SUZB3.SA) to create the world’s largest market pulp producer, according to a statement.
Shareholders Votorantim Participações SA and BNDESPar, the investment arm of Brazil’s state development bank BNDES, decided in favor of Suzano’s proposal even after Netherlands-based rival Paper Excellence BV raised its bid for Fibria on Wednesday.
BNDESPar will receive 8.5 billion reais ($2.59 billion) in cash as well as stock in the new company, which will continue to be listed in Brazil, the statement said. The transaction is subject to approval by anti-trust authorities, it added.
Minority shareholders will receive cash and stock in the same terms as the controlling shareholders, said the statement, which did not provide exact details of the offer.
Netherlands-Based Paper Excellence BV had offered 71.50 reais per Fibria share in its latest bid, above the 67 reais of the first offer unveiled on Monday, sources told Reuters on Thursday.
BNDES said in a statement that the Suzano offer complied with the state bank’s mission to strengthen Brazilian capital markets. Under the Paper Excellence offer, Fibria would likely have been delisted from the local stock exchange.
Sources familiar with the talks said that another key reason that shareholders were leaning towards Suzano’s bid was concern over a lack of firm financing by Paper Excellence, controlled by the Wijaya family, which also owns Asia Pulp & Paper Company Ltd.
BNDES had requested Paper Excellence to prove how the bid would be financed with documents from banks. The offer by the Asian group to pay a $1.2 billion break-up fee if the deal failed to get funding did not convince the state bank.
Paper Excellence would have had to spend up to 40 billion reais ($12.18 billion) to conclude its cash offer.
Additional reporting by Rodrigo Viga Gaier in Rio de Janeiro; Editing by Daniel Flynn