ALL Sinks in Sao Paulo on Concern Funds to Reject Cosan Deal

ALL-America Latina Logistica SA (ALLL3) fell the most on the Ibovespa after a newspaper reported that some of its controlling shareholders may reject Cosan SA Industria e Comercio’s $3 billion offer for the railroad company.

ALL sank 6.5 percent to 6.64 reais at the close of trading in Sao Paulo as the benchmark index dropped 1.4 percent. The shares rallied 8.9 percent yesterday after Cosan, a sugar-cane processor, offered to buy the company in an all-stock deal that valued shares at 10.184 reais. Folha de S.Paulo reported today that pension funds Previ and Funcef and private equity fund BRZ Investimentos found the offer too low. The newspaper didn’t say where it got the information.

“Shares are taking a beating today because of this concern that some funds are against the deal,” Roberto Altenhofen, an analyst at equity consulting firm Empiricus Research, said by phone from Sao Paulo. “From an operational point of view, the deal is very positive for ALL. But until the acquisition is final, shares may suffer with these kinds of reports.”

Cosan, which has an ethanol production and fuel distribution joint venture with Royal Dutch Shell Plc, proposed that its Rumo logistics unit swap shares with ALL. Under the terms of the offer, the merged company would eventually be split into two publicly traded units, one focusing on logistics and the other on energy.

So far Cosan has support from two of six investors in ALL’s controlling group, Riccardo Arduini and family and Wilson de Lara, who negotiated the deal’s terms on behalf of ALL. Representatives from the other four investors -- Brazil’s state-owned development bank, Previ, Funcef and BRZ Investimentos -- declined to comment on the offer. Three votes are enough to block the deal.

Previ, Funcef and BRZ also declined to comment on Folha’s report when contacted by Bloomberg News.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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