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February 1, 2010 12:59 PM

Davis Polk, Clifford Chance on $12B Brazilian Ethanol Joint Venture

Posted by Zach Lowe

Clifford Chance and Davis Polk & Wardwell took the lead roles in the day's biggest deal: Royal Dutch Shell's decision to dive into Brazil's sugar-based ethanol market in a $12 billion joint venture with the Brazilian biofuel giant Cosan, according to sources familiar with the deal. 

Clifford Chance partner Anthony Oldfield led the team for Shell, according to sources familiar with the deal. Clifford Chance has a long relationship with Shell; the firm has advised the company on several deals around the world, according to our archives and the firm's Web site. The firm also has had an office in Brazil for more than a decade, which might explain the big day Oldfield is having in Brazilian energy deals. According to a source familiar with the matter, Oldfield advised the Brazilian petrochemical company Braskem on its move to acquire the chemicals wing of Sunoco and the U.S. facilities that come with it. Braskem is paying about $350 million in the deal, according to The Wall Street Journal

Oldfield did not return messages seeking comment. 

Back to the big Shell-Cosan agreement. The deal is complicated, with both sides bringing various assets to the table. Shell will contribute about $1.6 billion in cash over the next two years as well as its retail gas stations in Brazil and its aviation fuel distribution unit, according to Reuters and Bloomberg. Cosan will contribute about $4.9 billion in assets, including the jewel of the deal: Cosan's sugar cane-based ethanol production business, Bloomberg reports. Brazil produces a huge portion of the world's sugar-based ethanol, and the deal gives Shell major access to that market as ethanol is poised to become a larger component of auto fuel worldwide. 

A Davis Polk team led by partners John Amorosi, Manuel Garciadiaz and Michael Davis advised Cosan on the deal. Amorosi declined to comment when reached by phone today. Davis Polk has represented Cosan for several years, including handling the company's listing on the New York Stock Exchange.

The Brazilian firm Barbosa, Müssnich & Aragão Advogados advised Cosan on Brazilian legal aspects of the deal. Souza, Cescon, Barrieu & Flesch played the same role for Shell. 

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The head of the article should be Clifford Chance, Barbosa Mussnich & Aragão. These are the main law firms. Davis Polk and Souza Cescon acted as foreign consultants. The article has bias.

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