Davis Polk & Wardwell LLP is advising Cosan S.A. Indstria e Comrcio in connection with the proposed formation of a $12 billion joint venture with Shell International Petroleum Company Limited in Brazil for the production of ethanol, sugar and power, and supply, distribution and retail of transportation fuels. Cosan is the worlds largest sugarcane producer and crusher; Brazils largest and one of the worlds three largest sugar producers; Brazils largest and the worlds second largest ethanol producer; and one of the largest fuel distributors in Brazil.
Under the terms of the non-binding memorandum of understanding, Cosan would contribute certain assets to the joint venture, including its sugar and ethanol businesses, its energy co-generation business, its fuel distribution and retail businesses, its ethanol logistics assets and its equity interest in an ethanol trading company, with a combined equity value of $4.925 billion. Cosan would also transfer net debt of approximately $2.524 billion to the joint venture. Shell would contribute certain assets to the joint venture, including its Brazilian fuel distribution and retail businesses and its equity stakes in companies involved in the research and development of biomass. In addition, over a period of two years from the formation of the joint venture, Shell would make a cash capital contribution to the joint venture in the amount of $1.625 billion and a contingent contribution based on certain future gains at the joint venture, estimated by Cosan at $300 million. Cosan and Shell have agreed to a 180-day exclusivity period to negotiate a binding joint venture agreement, subject to due diligence, final documentation and regulatory approvals.
The Davis Polk corporate team includes partners John D. Amorosi, Manuel Garciadiaz and Michael Davis and associate Paul D. Hodgdon, all of the New York office.
Barbosa, Mssnich & Arago Advogados is advising Cosan as to Brazilian law. Clifford Chance LLP and Souza, Cescon Avedissian, Barrieu e Flesch Advogados are advising Shell as to English and Brazilian laws, respectively.
D.C.