J&F acquires full control of Eldorado Brasil after billion-dollar deal with Paper Excellence

The groups Paper Excellence and J&F have reached an agreement that brings an end to one of Brazil’s most intense corporate disputes: the battle for control of Eldorado Brasil Celulose. According to reports, J&F is paying US$ 2.64 billion for the 49.41% stake in the company held by Paper Excellence. The dollar amount is nearly double what Paper paid in 2017; when adjusted for the exchange rate at the time, the amount in reais quadruples the R$ 3.8 billion initially spent.

Brothers Joesley and Wesley Batista, who control J&F, are paying a multiple of 10 times Eldorado’s EBITDA margin, above the average valuation multiples of rival companies, which range between 4.7 and 6.2 times EBITDA.

The outcome follows years of multimillion-dollar spending on legal teams and a judicial battle that played out in Brazilian courts as well as arbitration proceedings in Miami and Paris.

“There was no direct negotiation between Joesley and Wesley and Jackson [Widjaja], not even over price,” said a source close to the process. “They won’t even meet at the signing.”

 

Despite the sale, Claudio Cotrim, CEO of Paper Excellence in Brazil, will remain with the company, which continues to pursue strategic plans in the country and does not rule out new acquisitions either in Brazil or abroad.

The dispute began in 2018 when the Batistas, who already owned 51% of Eldorado, began contesting the agreed-upon value for selling full control to Paper Excellence. Although Paper won the arbitration and deposited R$ 11.2 billion in court, J&F appealed to the judiciary to annul the ruling.

Paper’s entry into Eldorado’s capital began in 2017 with the acquisition of a 13% stake via a capital increase, followed by the purchase of shares from pension funds Funcef and Petros, gathered under FIP Florestal, for R$ 3.8 billion.

Last year, the Batistas offered an additional R$ 6 billion to Indonesian executive Jackson Widjaja, CEO of Paper Excellence, in an attempt to settle the dispute, an offer that was rejected. Tensions escalated, with J&F even questioning the constitutionality of Brazil’s arbitration law and the legality of transferring Brazilian land to foreign entities, filing civil actions to block the transaction.

With this new agreement, J&F consolidates full control of Eldorado, closing one of the most emblematic chapters in Brazil’s pulp and paper industry.