Cosan in Talks to Buy BG’s $1.7 Billion Stake in Comgas

Cosan SA Industria e Comercio, which controls the world’s largest sugar-port terminal, said it’s in preliminary talks to buy BG Group Plc’s $1.7 billion stake in Brazil’s largest natural-gas distribution company.

Cosan and BG haven’t reached a binding agreement on the 60.1 percent stake in Cia de Gas de Sao Paulo - Comgas, and will inform the market of developments, Cosan said in a regulatory filing today. BG confirmed the talks in a separate statement.

BG, the U.K.’s third-biggest oil and gas producer, is considering selling the gas distribution assets as it ramps up spending on oil production projects in deep waters off the coast of Brazil. BG is a minority partner in the country’s largest oil field, Lula. Petroleo Brasileiro SA, Brazil’s state-controlled producer, is the field’s operator.

“In the short term, depending on the amount involved, the transaction would add too much pressure to Cosan’s leverage and cash position,” Erick Hood, an analyst at brokerage SLW Corretora, said by telephone from Sao Paulo. “For Comgas shareholders it could be positive, depending on the value.”

Cosan, based in Sao Paulo, fell 3.7 percent to 32.25 reais at 4:15 p.m. in Sao Paulo after dropping as much as 5.6 percent, the biggest decline since Feb. 22. BG rose 1.2 percent to 1,407 pence in London.

Cosan also jointly owns the sugar-cane processor with Royal Dutch Shell Plc and gets part of its sales from fuel and lubricant distribution.