Shell and Cosan plan to form a circa USD 12 billion joint venture in Brazil for the production of ethanol, sugar and power, and the supply, distribution and retail of transportation fuels. Under the terms of the memorandum of understanding, both companies will contribute certain existing Brazilian assets to the joint venture. In addition, Shell will contribute a total of USD 1.625 billion in cash, payable over two years. With annual production capacity of about 2 billion litres and significant growth aspirations, the joint venture will be one of the world’s largest ethanol producers. In addition, the inclusion of Shell’s equity interests in Iogen and Codexis would potentially enable the joint venture to deploy next generation biofuels technologies in the future. The deal would also enhance both companies’ growth prospects and market position in the retail and commercial fuels businesses in Brazil. With a network of about 4500 retail sites and a total annual throughput of about 17 billion litres, the JV would have a leading position in the fuels retailing market in Brazil, with strong potential for synergy capture and future growth.
