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Tereos starts talks with Petrobras to buy rest of Brazil sugar business

France’s Tereos [TEREO.UL] has started talks to acquire Petroleo Brasileiro SA’s 45.9 percent minority stake in their joint venture Guarani, as Brazil’s state-owned oil firm proceeds with plans to quit its biofuel activities.

Petrobras last month announced a 25 percent cut in planned investments to reduce its debts and revive investor confidence sapped by a corruption scandal, including a commitment to pull out of the biofuel sector.

Guarani runs seven sugar and ethanol mills in Brazil, making it one of the largest processors in the world’s top sugar producing country.

Tereos and Petrobras announced in separate statements on Friday that they had started negotiations regarding the sales of the Brazilian company’s minority stake.

The head of Tereos’ Brazilian operations said on Monday the French group was interested in buying Petrobras’ stake but that it had not yet been approached by its partner.

Tereos, which owns 54.1 percent of Guarani, has right of first refusal in the sale of Petrobras’ minority stake.

“This announcement follows … Petrobras’ Divestment plan in September 2016 which provides for the exit of all biofuels production activities,” Tereos said in a statement.

“The decision to start these negotiations is no assurance that an agreement will be found or that the transaction will complete,” Tereos said in a statement.

Petrobras said in an earlier stock market filing that it was in the process of hiring investment banking firm Banco Itau BBA as an advisor.

Bloomberg News reported on Thursday that Petrobras had hired Itau BBA to sell the Guarani stake.

Tereos last week raised its forecast for group earnings in its 2016/17 financial year in view of a sharp rebound in sugar prices.

The world’s third-largest sugar maker posted annual sales of 4.2 billion euros in 2015/16.

Reuters

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