Glencore cleared to buy Brazilian fuel distributor

Brazil's anti-trust watchdog Cade approved commodities giant Glencore's planned acquisition of a 78pc stake in ALE, Brazil's fourth largest fuel distributor.

The sale is expected to generate around R2bn ($538mn) for ALE, according to analysts' projections. The court decision comes a month after the firms announced an agreement that would leave one of ALE's founders, Marcelo Alecrim, with a 22pc stake in the firm.

Glencore has said the acquisition would provide the firm with "a strong platform to take advantage of the significant domestic growth opportunities across the fuels sector with the majority of the demand increase to be met by imports."

The regulatory approval ends months of uncertainty over ALE's fate after Cade rejected Brazilian fuel distributor Ipiranga's planned R2.7bn acquisition of the firm last year. At the time, Cade determined that deal would concentrate the market in three companies: Ipiranga, the distribution arm of Brazilian conglomerate Ultrapar; Raizen, a 50:50 joint venture between Cosan and Shell; and BR Distribuidora, a subsidiary of state-controlled Petrobras.

The court concluded the transaction with Glencore does not "generate horizontal overlaps" or raise competition concern. The court approved the deal without restrictions.

ALE has a strong presence in Brazil's north and northeast and holds around 3pc market share. The company operates a network of around 1,500 retail stations in 22 states and about 260 convenience stores.

BR Distribuidora has 31pc market share in Brazil, followed by Raizen with 20pc and Ipiranga with 19pc.

The Glencore deal comes amid a major debate about fuel prices in Brazil, which in May adopted a controversial diesel price subsidy.