In January, Brazil's Votorantim Group, through Votorantim Celulose e Papel (VCP) said it concluded negotiations with the Lorentzen, Moreira Salles and Almeida families (Arapar Group) to buy about 28% of the voting stock of Aracruz Celulose for R$2.71 billion (approx. $US1.16 billion). The merger will create the world's largest pulp company.

The Safra Group (Arainvest), which also owns 28% of the Aracruz voting capital, can exercise its right of first refusal to buy or right to sell its shares in Votorantim, according to an agreement between Arapar and Arainvest in 2003. Should Safra decide to sell its stake in Votorantim Group, the company will be restructured and become a wholly owned subsidiary of VCP that, in turn, will be jointly controlled by Votorantim and the Banco Nacional de De sen - volvi mento Econ™mico e Social (BNDES), Brazil's national development bank.

Votorantim Industrial will hold around 29% of the total shares and 82% of the common shares. The whole process will include a number of stages over the next six months and lead to a new company with shares traded in Bovespa's Novo Mercado. Votorantim will hold 40% of the new company's total capital.

The company will have productive capacity of 5.8 million tonnes/year, more than one million hectares in operated areas (40% of which are preserved), around 15,000 employees including direct and outsourced staff, and R$7 billion in annual net revenues.

VCP and Aracruz will continue to work separately until the consolidation of the entire operation. www.votorantim.com.br.

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