US O2Diesel Corporation (AMEX: OTD), has agreed to buy German biofuels distributor YellTec GmbH. YellTec focuses on small to medium size truck fleets and operates an exclusively German based network of its own strategically located fueling points with sales estimated to be approximately €34 million for the year ended 31 December 2007.

O2Diesel is acquiring all the outstanding shares of YellTec for €3 million and 5.3 million shares of O2Diesel common stock. The final price is subject to a purchase price adjustment as described in the agreement. O2Diesel expects the transaction to close during the second quarter.

The move, says O2Diesel, will, together with its recently announced licensing agreement with KL Process Design Group, provide it with a significant presence in one of Europe's largest biofuels markets. YellTec will become a wholly owned subsidiary of O2Diesel Europe and will target small to medium size truck fleet operators providing a variety of fuel blends according to customer needs, while taking advantage of the constantly changing price differentials between mineral diesel and renewable fuel components.

"This acquisition is a key element of our strategy towards becoming a diversified renewable fuels company. By building on our experience and knowledge gained during the last 10 years in the global renewable fuels market, we believe we are in a strong position to identify other expansion opportunities for the YellTec business model while developing new markets for our proprietary ethanol diesel blended fuel in Europe. With the consolidated company we will accelerate and diversify O2Diesel's revenues while generating significant cash-flow from operations", said Alan Rae, CEO of O2Diesel.

Mr. Rae continued, "This established, national German network of fueling sites provides O2Diesel with a competitive edge in distribution. Working together with our supply partners, we will seek to provide a greater incentive to diesel fleet operators who may have resisted the change to cleaner burning renewable fuels because of price and availability. By controlling a larger percentage of the value chain for sales of diesel fuel and its cleaner alternatives, we become a vital link in helping small to medium size fleets gain access to the best price of their fuel, which accounts for as much as 40% of the overall operating costs of our target customers. We expect the strategy will create a stronger, more diversified company that is positioned for long-term future growth in other European countries as we expand this model. We are currently engaged in positioning the Company to take advantage of its emerging status as a leading innovator in the renewable fuels market."

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