SLC Agrícola Reduces Land Purchase and Eases Cash Pressure

SLC Agrícola has redesigned the terms of its controversial land acquisition in Mato Grosso, and the market responded with relief. Shares of the Logemann family company rose about 3.3% after the announcement that the total disbursement will drop from R$ 1.85 billion to R$ 669 million. The difference is significant: instead of purchasing 28,800 hectares of arable land, SLC will retain 8,900.

This move addresses, at least partially, the main concern that has weighed on the stock in recent months. With a stock that has accumulated a 15% decline over twelve months and already high leverage, the exercise of the right of first refusal for the entirety of the land had been poorly received by the market in mid-June.

What Changed in SLC's Transaction with Radar

The original operation involved land owned by Radar, a joint venture between Cosan and Nuveen. Bom Futuro, owned by entrepreneur Eraí Maggi, had made an initial offer to acquire the complete package. SLC, which leased a large portion of this land, decided to exercise its right of first refusal and cover the proposal. This decision generated discomfort among investors concerned about the impact on the balance sheet.

Now, the company has reached an agreement to split the farms with Bom Futuro and entrepreneur Alexandre Bottan, who were also lessees of part of the areas. In the new configuration, SLC retains a total of 11,000 hectares (8,900 arable), Bom Futuro takes 18,700 hectares, and Bottan acquires 4,600. The division drastically reduced the financial pressure on SLC, as highlighted in our coverage of the financial sector.

Leverage Decreases, but Cost per Hectare Rises

The numbers tell two simultaneous stories. On the positive side, the projected leverage for the end of 2025 fell from 2.7x EBITDA to 2.3x, according to estimates from Citi analysts. The annualized incremental cash burn decreased from R$ 217 million to R$ 82 million. This is a significant relief for a company valued at R$ 6.7 billion on the stock market, whose stock had already been under pressure.

On the less favorable side, the cost per hectare increased. In the original transaction, SLC would pay R$ 64,000 per hectare. In the new format, the price jumped to R$ 72,000, a premium of 12.5%. Analysts interpret that the company may have retained the more valuable lands from the package, which explains the price differential. The implicit cap rate stood at 2.8%, a level considered tight for the agricultural land investment sector.

What Happens to the Lease Contracts

SLC leased 17,600 hectares in total before the transaction. With the new configuration, it will continue to operate 8,700 hectares that it did not purchase until the respective contracts expire. The transition dynamics are staggered: 5,300 hectares have contracts expiring in the 2029/2030 harvest, while 900 hectares expire in the 2026/2027 harvest. These areas will pass to Bom Futuro's operation after the leases end.

There is also a relevant detail. The 2,500 hectares acquired by Bottan, whose lease contract expires in the 2026/2027 harvest, will be leased back to SLC in a 15-year agreement at a cost of 19.5 sacks of soybeans per hectare. In practice, SLC maintains operational access to part of the land it did not purchase, diluting the productive impact of the reduced scope.

What This Means for the Investor

The payment will be divided into two installments. The first, of R$ 255 million, will be disbursed now. The remaining balance is due in October. This structure provides additional breathing room for the company's cash in the short term.

For those following the agribusiness sector on the Brazilian stock market, the lesson is clear: the market penalizes acquisitions that compromise the balance sheet and rewards financial discipline. SLC has moved from a position of high risk to a more manageable scenario, even though the returns from the operation remain tight.

The episode also illustrates the complexity of transactions involving agricultural land in Brazil, where rights of first refusal, multiple lessees, and parallel negotiations can completely reshape an operation in a matter of weeks. The positive market reaction suggests that, even while paying more per hectare, the reduction in the total size of the commitment was what investors needed to see.

With leverage more controlled and the productive operation partially preserved through long-term leases, SLC is trying to turn the page on a quarter marked by volatility surrounding this acquisition. It remains to be seen whether the execution in the coming months confirms the more optimistic projections of analysts.

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