Abengoa Bioenergy enters Brazilian market via acquisition of Dedini Agro

In a major development, Abengoa's subsidiary Abengoa Bioenergy has signed an agreement to acquire one hundred percent of the capital of the Dedini Agro group of companies for €216/US$297 million. Dedini Agro is one of the major companies in the Brazilian bioethanol and sugar market. In addition, the operation includes Abengoa assuming a debt of €281/US$387 million.

The acquisition is highly important for the global biofuel sector because Abengoa's cellulosic ethanol technologies will now be applied to sugar cane husks and to the processing byproduct bagasse, to yield a fuel the energy balance of which may come close to or even surpass that of petroleum based fuels.

Dedini Agro is one of the major companies in Brazil dedicated to the cultivation and processing of sugar cane and the production of bioethanol and sugar with two production facilities in the State of São Paolo. These two facilities currently operate with production costs that are among the most competitive in Brazil and the world thanks to their location, the experience of their human teams and the fact that they have direct control of a significant part of the crop lands via long-term contracts.

With this acquisition, Abengoa Bioenergy becomes the only company in the world to be present in the world's three major bioethanol markets: the United States, Brazil and Europe. Following the integration of Dedini Agro, Abengoa Bioenergy expects to attain significant increases in production at the existing facilities in Brazil, develop a new facility, and achieve more effective international marketing of the bioethanol produced in Brazil thanks to Abengoa Bioenergy's existing trade networks.

International significance
Importantly, Abengoa Bioenergy will be able to apply the cellulosic bioethanol technology it is developing to the sugar cane husks to achieve a medium-term increase in production and more efficient cost reduction. Combining both companies' technologies and resources, Abengoa Bioenergy could soon be producing the world's most energy efficient, cleanest and competitive fuel. The company currently operates the world’s first commercial scale cellulosic biomass-to-ethanol in Babilafuente (Salamanca), Spain, which processes 70 tonnes of agricultural residues each day to produce over 5 million liters of fuel grade ethanol per year (process overview, click to enlarge).

Moreover, the combination of Abengoa Bioenergy's international marketing and cellulosic bioethanol technology capacities and the local agricultural, production and marketing capacities will result in very significant synergies that will allow the attainment of important growth levels in the world's bioethanol market together with the technology that will allow the achieving of lower costs per liter of bioethanol:
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Eventually, technologies and processes developed by Abengoa Bioenergy as they are applied to sugar cane, could be transferred to developing countries with a large bioenergy production potential, to meet a large part of the world's rapidly growing fuel needs.

Brazil is the world's major bioethanol market with an annual production of 17,5 billion liters in 2006. The consumption of bioethanol is expected to continue to grow strongly thanks to the success of the flex-fuel vehicles that represent 90% of the number of vehicles sold in Brazil and that allow the use of gasoline or bioethanol without distinction.

Abengoa Bioenergy is the first European, fifth in the U.S.A, and the only worldwide bioethanol manufacturer, with more than 1000 ML/year of total installed capacity. In Spain maintains three production facilities with a capacity over 500 ML/year.

Abengoa is a technology company applying innovative solutions for sustainable development in the infrastructures, environment and energy sectors. It is a listed company with treasury stock of €3.166 billion and is present in more than seventy countries where it operates with its five Business Units: Solar, Bioenergy, Environmental Services, Information Technologies, and Industrial Engineering and Construction.