Noble Group (N21.SG) is down 0.5% at $2.06 vs the STI’s 0.3% rise in a muted reaction to a Brazilian media report that Noble will acquire 2 mills belonging to ethanol producer Grupo Cerradinho for BRL1.6 billion (around US$1.2 billion).

The report says Noble will pay BRL600 million in cash and assume BRL1 billion of debt. “Sugar is a very good place to be from a long term perspective,” says an analyst.

“The thing is how much they’re paying for it. If the report is correct, they’re paying around a billion dollars which may be justified assuming current sugar prices, but prices may come down in the near term. However, if it’s true, we’ll be more positive than negative, as Noble should be using its balance sheet and cash to grow their assets.”

A spokesman for Noble says there is no announcement on the report.