Lavoro Sells Distribution Business in Brazil to Arcos, Accelerates Company Restructuring

• What’s the Deal Between Lavoro and Arcos?
• Why Is Lavoro Restructuring?
• What’s Next for Lavoro?
• How Did Lavoro Get Here?
• What Does This Mean for Brazil’s Agribusiness Sector?
• FAQs

Lavoro, a major player in Brazil's agricultural inputs market, has sold its distribution business to Arcos Gestão e Investimento (AGI) as part of a broader restructuring effort. The MOVE follows financial struggles, including a 34% revenue drop in 2025 and a Nasdaq delisting earlier this year. This article dives into the details of the transaction, the company’s challenges, and what’s next for Lavoro.

What’s the Deal Between Lavoro and Arcos?

Lavoro announced on March 6, 2026, that AGI will take over management of its agricultural inputs distribution business in Brazil. The transaction is part of Lavoro’s ongoing restructuring, which includes shifting operations to a new administrator. "Lavoro Agro Holding S.A. informs that, as of March 6, 2026, the management of the agricultural inputs distribution vertical in Brazil will be conducted by Arcos Gestão e Investimento," the company stated. AGI specializes in asset management and corporate restructuring, making it a strategic fit for Lavoro’s needs.

Why Is Lavoro Restructuring?

Lavoro’s financial troubles intensified in late 2024, with severe inventory shortages during the soybean planting season. This led to a 34% revenue decline in fiscal 2025, down to R$6.2 billion, and a 33% drop in gross profit to approximately R$900 million. The company also closed 70 stores (about a third of its network) and suspended its acquisition strategy. In June 2025, Lavoro filed for judicial recovery to restructure R$2.5 billion in debts with suppliers, a plan approved by São Paulo’s 2nd Bankruptcy Court in November 2025.

What’s Next for Lavoro?

With the distribution business now under AGI’s management, Lavoro can focus on stabilizing its remaining operations. Marcelo Pessanha, who took over as CEO in December 2025, faces the challenge of steering the company toward profitability. Meanwhile, Lavoro’s exit from Nasdaq in February 2026 marks the end of its brief stint as a publicly traded company, a move attributed to high compliance costs and low trading volume.

How Did Lavoro Get Here?

Founded in 2017 by Pátria Investimentos, Lavoro grew rapidly through acquisitions, completing over 20 deals before going public on Nasdaq in March 2023. However, the company’s aggressive expansion collided with Brazil’s volatile agricultural market, leading to its current predicament. The sale to AGI is the latest in a series of divestments, including the December 2025 sale of its Crop Care division to Pátria-managed funds.

What Does This Mean for Brazil’s Agribusiness Sector?

Lavoro’s struggles reflect broader challenges in Brazil’s agricultural inputs market, including tighter margins and credit restrictions. The company’s restructuring could signal consolidation in the sector, with stronger players like AGI gaining market share. For farmers, the hope is that AGI’s management will bring stability to Lavoro’s distribution network.

FAQs

When did Lavoro sell its distribution business to Arcos?

The deal was announced on March 6, 2026.

Why did Lavoro leave Nasdaq?

The company cited high compliance costs and low trading volume as reasons for its February 2026 delisting.

How much debt is Lavoro restructuring?

The judicial recovery plan covers R$2.5 billion in debts with suppliers.