November 12, 2010 / 3:09 PM / in 7 years

UPDATE 1-BP bids $466 mln for Brazil cane group stake-paper

 * BP wants 50 pct of sugar/ethanol producer - report
 * Purchase would be BP’s 2nd foray in Brazil ethanol  (Adds comments from Cerradinho spokesman)
 SAO PAULO, Nov 12 (Reuters) - BP (BP.L) has bid 800 million reais ($466 million) for a 50 percent stake in Brazil’s Cerradinho sugar and ethanol group, a Brazilian newspaper reported on Friday.
 Talks between the companies started a few months ago and should be concluded on Friday, when Cerradinho’s board is expected to give a definitive answer to the proposal, O Estado de S.Paulo newspaper said.
 If Cerradinho rejects the deal, talks could be resumed with other groups interested in the firm such as Bunge (BG.N), Cosan (CSAN3.SA), Tereos TERI3.SA, Noble (NBL.N) and Louis Dreyfus, the newspaper said.
 A spokesman at Cerradinho said the company could not confirm BP’s bid but said Cerradinho is seeking a minority shareholder as part of a broader corporate restructuring.
 “The company is analyzing several options and almost got to a decision, but hasn’t concluded anything yet. We’ll likely have a decision by December,” he said.
 BP’s office in Brazil said the company “does not comment on market speculation.”
 The acquisition would be BP’s second investment in the Brazilian biofuels industry.
 In April 2009, the UK oil major bought a 50 percent stake in Tropical Bioenergia SA, with a mill in the central state of Goias. French group Louis Dreyfus later bought one of the local partners, becoming a stakeholder in the joint venture.
 DISTRESSED MILLS
 Cerradinho, which has for decades operated in Brazil’s sugar industry, has three mills that will crush about 10 million tonnes of cane in the current season.
 Mergers and acquisitions have accelerated after the global credit crisis in late 2008 caught many mills too indebted in the middle of ambitious expansion programs.
 The situation left a handful of distressed players in a sector that had been previously considered overvalued.
 BP was the first oil giant to invest in the sector, followed by Brazilian state oil company Petrobras (PETR4.SA), Exxon Mobil (XOM.N) and Royal Dutch Shell (RDSa.L), which is teaming with sugar and ethanol group Cosan (CZZ.N).
 Earlier this month, BP said it was focusing its biofuel efforts on Brazilian sugar cane and U.S. energy grasses, holding off on investments in the rest of the world for the moment. [ID:nLDE6A217L]  (Reporting by Inae Riveras; Editing by Dale Hudson and Lisa Shumaker; Editing by Lisa Shumaker)       

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