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Raízen nears buying Shell's Argentina gas station chain: sources

[SAO PAULO] Brazil's Raízen Energia SA is close to buying parent Royal Dutch Shell Plc's Argentina gas station network for more than US$1 billion, two people familiar with the plan said.

Raízen's non-binding bid topped rival offers by Argentine oil company YPF SA, Chile's Quinenco SA and China National Petroleum Corp's Petrochina Co Ltd, two of the sources said. The four companies participated in a competitive auction process overseen by Credit Suisse Group AG, they said.

Raízen, which controls Brazil's second-largest chain of gasoline stations, has been exploring financing alternatives for the deal with banks or in international bond markets, one source said. Shell and Brazil's Cosan SA Industria & Comércio each own 50 per cent of the 6-year-old joint venture.

In a statement, Shell said it would not comment on potential deals. Raízen also declined to comment.

Interest in Argentine assets has increased since President Mauricio Macri's business-friendly administration took office in December 2015. The value of announced mergers in Latin America's third-largest economy totals US$10.847 billion so far this year, 15 times the level of the same period in 2015, Thomson Reuters deals intelligence data showed.

Shell, which has 630 Argentine gas stations, put the unit up for sale earlier this year as part of a US$30 billion divestiture program to cut debt following last year's acquisition of BG Group Plc.

In Brazil, Raízen's gas station network uses the Shell brand. According to the sources, Raízen chief executive officer Luis Henrique Guimarães has personally engaged in the acquisition talks.

Common shares of Cosan, partner at Raizen, rose 0.5 per cent on Thursday morning trading in Sao Paulo, to 37.88 reais, extending gains over the last month to 5.3 per cent. Raízen is not listed.

Royal Dutch Shell shares rose 0.3 per cent in London to 2173 pence, bringing gains over the last month to 3.8 per cent.

In 2011, Quinenco, a conglomerate controlled by Chilean Luksic family, bought Shell's fuel distribution business in Chile. Quinenco's Empresa Nacional de Energia Enex SA also uses the Shell brand across the country.