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NOTICE TO THE MARKET
São Martinho S/A Announces the Conclusion of
the Subscription of Shares in Nova Fronteira Bioenergia S/A

São Paulo, December 10, 2010 - São Martinho S/A (Bovespa: SMTO3; Reuters: SMTO3 SA and Bloomberg: SMTO3 BZ), one of the largest sugar and ethanol producers in Brazil, announces the conclusion of the subscription of shares in Nova Fronteira Bioenergia S/A by Petrobrás Biocombustível S/A and by the shareholders of São Martinho S.A.

As per the “Material Fact” disclosed on June 21, 2010, the São Martinho Group and Petrobrás Biocombustível, entered into a strategic partnership agreement to produce ethanol in Brazil‘s Midwest Region that involves “Usina Boa Vista S.A.” and “SMBJ Agroindustrial S.A.”, which are assets of the São Martinho Group located in the state of Goiás.

The payment of shares subscribed by Petrobrás Biocombustível in the capital of Nova Fronteira Bioenergia totaled 409,888,065 shares at the price of R$1.025788/share. The payment will be made in two installments:

1st Installment: R$257.4 million by December 17, 2010, on demand and in local currency;

2nd Installment: R$163.0 million within twelve (12) months, restated by the variation in the IPCA Consumer Price Index (“IPCA”).

In addition, in accordance with the “Notice to Shareholders” disclosed on November 1, 2010, the payment by São Martinho shareholders into Nova Fronteira Bioenergia S.A., under the same conditions, totaled 405,308 shares and R$415,760.17, paid in two installments or in a single installment, at the discretion of the shareholders.

To see the PDF version, please click here.

Sincerely,

João Carvalho do Val
Chief Financial and Investor Relations Officer

Felipe Vicchiato

Investor Relations Manager

Telefone: 11 2105-4100
Email: ri@saomartinho.ind.br
IR Website: www.saomartinho.ind.br/ir

About São Martinho

The São Martinho Group is one of the largest sugar and ethanol groups in Brazil, and operates three mills: São Martinho, in Pradópolis (in the Ribeirão Preto region of São Paulo state); Iracema, in Iracemápolis (in the Limeira region of São Paulo state); and Boa Vista (in Quirinópolis, 300 km from Goiânia, in Goiás state); as well as a unit producing a ribonucleic acid known as Omtek, which is also based in Iracemápolis. For more information, please visit the website at www.saomartinho.ind.br.