Cosan to Price $1bn-$2bn Follow-on Today

Brazilian sugar producer Cosan should price a global follow-on offering, which is also its US IPO, today. The offering of 100m Class A shares in the US and Class A shares in the form of Brazilian depositary shares in Brazil will allow Cosan to incorporate in Bermuda and propel the company into the global ethanol industry. Bankers away from the deal expect it to fly on global demand for ethanol stocks, in spite of a negative response from some minority shareholders to the reorganization. Cosan listed on the Novo Mercado, the segment of the Brazilian stock exchange with the highest standards of corporate governance. Cosan’s stock closed at the BRL equivalent of $12.98 yesterday, down from $18.71 on June 25 when the deal was announced. The company will sell the 100m shares based on the last offer price, and the underwriters have a 15% over allotment option. After the global offering, Cosan will launch an offer to minority shareholders to exchange their existing Class A shares of Cosan SA, traded in São Paulo, for BDRs. The restructuring will ensure controlling shareholder Rubens Ometto Silveira Mello maintains control over the company. Credit Suisse, Goldman Sachs and Morgan Stanley are leading.