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Brussels, 21st April 2009

Mergers: Commission approves proposed acquisition of Aracruz by Votorantim

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Brazilian company Aracruz Celulose S.A. (Aracruz) by the Brazilian company Votorantim Group (Votorantim), a company with interests in a diversified portfolio of industrial and financial activities. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Votorantim has operations in the cement and concrete, mining and metallurgy (aluminium, steel, nickel and zinc), concentrated orange juice, and speciality chemical markets, in self-generation of electric power, and in the financial sector. Through its affiliate Votorantim Celulose e Papel S.A. (VCP) and its stake in Aracruz, Votorantim is also active in the pulp and paper markets.

Aracruz is mainly active in the production of pulp and wood products.

The proposed take-over of Aracruz by Votorantim involves a change from joint to sole control. It creates a horizontal overlap in the pulp market. However, the Commission’s investigation confirmed that the parties combined market share will remain well below 15% on the global and EEA pulp market. Under any reasonable narrower product market definitions, the merged entity would also continue to face several strong, effective competitors after the proposed transaction.

Furthermore, the operation creates two vertical relationships: Aracruz’s upstream presence in pulp is vertically related to Votorantim’s downstream presence in the paper market. However, the Commission found that the merged entity would not have the ability to restrict access to pulp given Votorantim’s limited market presence at the downstream level and since many pulp competitors remain. In addition, there is a potential vertical link between Votorantim’s presence in the upstream market for sulphuric acid and Aracruz's in the downstream market for pulp. The Commission ruled out this potential vertical concern since the use of sulphuric acid is not required for the specific type of Aracruz’s pulp production.

More information on the case will be available at:

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