Strattner Financial Group (SCNG)

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WISH THIS WAS EVFN! SAN FRANCISCO (MarketWatch) Cosan Ltd., (CZZ 8.63, +0.83, +10.64%) , (BR:COSAN 23.72, +2.41, +11.31%) Brazil's top ethanol-maker, and Royal Dutch Shell (UK:RDSA 1,759, +19.00, +1.09%) announced on Monday a $12 billion venture that will merge the companies' ethanol fuels distribution in Brazil.

U.S.-listed shares of Cosan Ltd. rallied 8.9% to $8.49 after the announcement while the U.S.-listed shares of Royal Dutch Shell rose 1.7% at $56.32.

In Cosan's filing with stock regulators, the ethanol-maker said it had struck an agreement with Royal Dutch Shell to form a joint venture in Brazil for the production of ethanol, sugar, and power.

The deal will create Brazil's third-largest fuel distribution network. Cosan, which broke into the distribution industry in 2008, will expand its distribution business while Shell will get a share of Cosan's ethanol.

The partnership will create two companies, one focused on ethanol production and power generation and another to distribute the fuel through 4,500 gas stations across Brazil.

In the deal, Shell plans to pay Cosan $1.63 billion in cash over two years.

"With annual production capacity of about 2 billion liters and significant growth aspirations, the Joint Venture would be one of the world's largest ethanol producers," the companies said in a news release.

Liana B. Baker is a MarketWatch reporter based in San Francisco.