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 million ($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 million ($387 million).

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 Sao Paolo. These two facilities currently operate with production costs that are, says Abengoa, among the most competitive in Brazil and the world.

The move gives Abengoa an entry to Brazil, one of the world's major bioethanol markets with an annual production of 17,500 million liters (2006). The consumption of bioethanol is expected to continue to grow strongly thanks to the success of the fuel flexible vehicles that represent 90% of the number of vehicles sold in Brazil and that allow the use of gasoline or bioethanol without distinction.

The acquisition, says the company, makes Abengoa Bioenergy 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. Furthermore, 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.

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.