Under the agreement entered by the two firms, Cosan will acquire all the outstanding shares of Zanin for $142 million Brazilian reais, as well as assume debts of approximately $236.6 million reais. Cosan is to use its available funds to finance the transaction.

Through the acquisition Cosan will gain access to Zanin’s industrial and agricultural operations and a Greenfield project in the city of Prata, State of Minas Gerais. Zanin currently has 2.6 million tons of sugarcane crushing capacity.

Cosan is the largest sugar and ethanol producer in Brazil and ranks third in sugar and fifth in ethanol production in the world. Apart from its core operations, the company is also engaged in energy production from sugarcane bagasse.

Cosan’s other businesses includes Fuel distribution, for which the company is keen on becoming the third largest distributor in Brazil after the consummation of the recently announced joint venture with Shell International Petroleum Company Limited.

Cosan, over time, has been growing through acquisitions and other expansion strategies. We believe the company is well positioned to benefit from the acquisition of Zanin by gaining operational and logistics synergies.

Cosan has 23 production facilities, 21 in São Paulo State, one in the city of Jataí (Goiás State) and another one in Caarapó (Mato Grosso do Sul State). It also operates four refineries and two port terminals. Through Cosan Combustíveis e Lubrificantes, licensed to use the Esso and Mobil brands, it has become the only totally integrated company in the sector.

A producer of crystal sugar (VHP), granulated refined sugar, organic sugar, amorphous liquid sucrose and inverted liquid sugar, ethanol and electric energy (produced from sugarcane), Cosan is the third largest sugar producer in the world, the fifth largest ethanol producer, and one of the world’s largest ethanol exporters. In the 2008/2009 harvest it crushed a record 44.2 million tons of sugarcane. With its incorporation of NovAmérica, its crushing capacity is today about 60 million tons. Its shares are traded on both the Bovespa and the NYSE.

According to the news report, the move is aimed at securing sugar supplies as it seeks to bolster its supplies. The news report quoted Hassad Food’s chairman as having reiterated the Brazilian business plans. Qatar, just like the other states in the Gulf imports most of its food requirements and securing future food supplies comes naturally as a priority for the government, said the report.

From the reports, the Brazilian acquisition investment is expected to take place in two months time, Nasser al-Hajri, Hassad Food chairman told the Qatar News Agency. However, no details were immediately given over the nitty gritties of the planned investment. Around 70 percent of the sugar is planned to be shipped to Qatar for domestic use, while the remaining 30 percent will be used to produce bio-fuels, Qatar News Agency said.

Hassad Food is Qatar’s Premier investor/developer in the agriculture & livestock sector. As the industry’s pace-setter in the country, Hassad Food is investing worldwide, in strategic projects, companies and operators. The firm has a geographical diversification and forges partnerships and alliances with key global players in the competitive, agribusiness environment.

Hassad Food is keen on securing & improving food-supply sources that are in harmony with the environment. The firm reiterated that its commitment to using the latest technology to generate high quality yields has been successful. Hassad Food is a global provider targeting achieving food security by growing, processing and supplying high quality food and improving access. Currently, Hassad Food is engaged in investing worldwide, in strategic projects, companies and operators.

The Qatar Investment Authority (QIA) is Qatar’s sovereign wealth fund, specializing in local and foreign investment. It was founded in 2005 to manage the extra oil and natural gas surpluses that Qatar Government was receiving. The QIA wholly controls the Qatari Diar Real Estate Investment Company (Qatari Diar), which is a property investment fund. QIA is estimated to hold in excess of $60 billion of assets.

In the fresh deal, Shree Renuka Sugars will pay about a quarter less for the investment in a majority stake in Equipay SA Acucar e Alcool at $250 million given the fact that sugar prices have almost halved, on better output estimates, since the company commenced the deal negotiations in February.

Global sugar prices corrected by more than 40% from their 2010 peaks, and pundits expect them to stay at such lows as supplies will improve further in 2010/2011. The renegotiation makes the deal a pleasant for the Indian firm in spite of the decline in sugar prices.

Pundits expect the investment to benefit Shree Renuka Sugars in the long term, in terms of procuring raw sugar for their port-based refinery in India.  Equipay is expected to be accretive on Shree Renuka’s bottom line from the fiscal year ending September 2011, even though it is not as yet clear.

Shree Renuka’s strategy and planning head, Gautma Watve, said in an interview with Reuters that it will be weeks before Equipay’s financial details can be revealed. Even so, it is hoped that the company will experience a mega leap in operating profits in the 2010 fiscal year but after tax revenues will turn accretive in the financial year 2011, said Gautma. The fiscal calendar of Indian sugar firms is between October and September, used for financial accounting by some of them.

The Indian company, currently valued at $1.01 billion had earlier offered $329 million for Equipay, viewed by pundits as costly at that time. According to Gautma, the Brazilian firm had about $822 million in debt as at 2009, December, and reported that it had renegotiated it with bankers and would thus pay it off in 10 years, instead of the initial agreed 8 years.

In a filling to the stock exchanges, Shree Renuka said in a statement that the new terms now value Equipay, owner of two huge sugar mills in Brazil, at $1.15 billion. The company expects to inject the proceeds from the deal to partly repay debt, working capital and on capital expenditure.  This is Shree Renuka Sugars’ second major acquisition after it closed a deal to buy sugar and ethanol producer Vale Do Ivai S.A. Acucar E Alcool for $82 million in March 2010.

The new ethanol JV is yet again the third biggest investment by an oil giant in the country’s fragmented, but quickly consolidating ethanol sector in which companies are fighting for a portion of the world’s biggest scale sugar based ethanol production hub.

JOB Economia President, a firm with expertise in sugar and ethanol based in Sao Paolo state, said this new JV investment in ethanol production is an indication of the country’s sugar and ethanol sector’s fastly consolidating and there is abundant space for other similar deals, Julio Borges said. According to Borges, global giants such as Petrobas, BP PLC and Cosan Industria e Comercio SA, the global ethanol and sugar giant, and Archer Daniels Midland are all willing to make additional major investments in Brazil’s ethanol industry, with the market getting an increased controlled by large, well capitalized companies with such investments as a start.

Borges termed the Petrobras investment in the JV as the beginning of similar investments to follow in the sugar and ethanol industry in the country. The JV deal comes in the wake of Petrobas push for a 45.7% stake in Guarani group, a sugar group in the country and the fourth largest, for $911 million last month.

Back in March, Dutch Company, Royal Dutch Shell PLC undertook so far the biggest ever foreign investment deal in Brazil’s ethanol industry with a $12 billion tie up with Cosan, coming in the wake of a previous purchase BP had made in 2008 for a stake in Tropical Bioenergia SA.

Additionally, other similar investments in the sector included the American based Bunge Ltd’s investment in the purchase of Usina Moema Participacoes SA and France’s Louis Dreyfus Commodities buying of Santelisa Vale, a giant sugar and ethanol group in the country, while Cosan invested in local Brazilian milling group NovAmerica.

Monday’s investment is expected to benefit both Petrobras and Sao Martinho, with Petrobras getting the know-how and expertise of a major sugarcane miller, while Sao Martinho benefits from the financial support of Petrobras.