Petrobras Denies CZZ Takeover

Some days ago we wrote about the statement of Petrobras (PBR - Analyst Report) regarding the possibility of some kind of partnership with local Brazilian ethanol producers and how this would benefit Cosan Ltd. (CZZ - Analyst Report), the biggest ethanol producer in Brazil and one of the biggest in the world.

We also said that there were rumors in the market that Petrobras could even consider the acquisition of Cosan. In the last few days, Cosan's shares soared more than 40%.

Yesterday, Pertrobras came public with a formal statement denying any kind of negotiation with Cosan related to the acquisition of the company. However, a possible partnership was not denied at all.

Some weeks ago we changed our Hold recommendation on Cosan to a Buy recommendation based on the better sugar and ethanol prices, and the possibility of new investments in this sector in Brazil since the Obama administration is highly concerned with the use of clean energy sources.

We were not impressed by the rumors of the acquisition, which we considered unlikely anyway, and we see no reason to change our positive outlook on Cosan for the following quarters.

Read the full analyst report on PBR

Read the full analyst report on CZZ