Brasil Ecodiesel tumbles 10.4% yesterday after confirmed merger talks

(ADPnews) - Oct 26, 2010 - Biofuel maker Brasil Ecodiesel (SAO:ECOD3) yesterday closed down 10.4% to BRL 1.12 on Brazil's Sao Paulo Stock Exchange, after confirming earlier it is in talks for a possible merger with local agribusiness company Maeda Agroindustrial.
The plunge put Brasil Ecodiesel among the biggest losers included in the benchmark index Ibovespa, on Monday.
Last Friday, before Brasil Ecodiesel had admitted the negotiations and when rumours of the possible merger were at its peak, Brasil Ecodiesel's stock gained 15.74% to BRL 1.25.
Brasil Ecodiesel said in a statement that under the deal, subject to final approval by the companies, each share of Brasil Ecodiesel will be exchanged for 3.6395 shares of Maeda. According to analysts, this values Maeda at BRL 320 million (USD 188.7m/EUR 135m), or 33% of the merged company. Brasil Ecodiesel has promised to keep the market informed over any news related to the transaction. Thus, new details are awaited shortly.
According to an article of Brazilian news portal Exame, which was the first to suggest Brasil Ecodiesel and Maeda might merge, the deal is linked to Maeda's debt restructuring and will involve the sale of 14.3% in the merged company to a Hong Kong fund.
The deal is seen to be completed by December 31, 2010.
(BRL 1 = USD 0.59/EUR 0.422)

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