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MATERIAL FACT
São Martinho Acquires Stake in Santa Cruz and Agropecuária Boa Vista

São Paulo, October 31, 2011 - São Martinho S.A. (BM&FBovespa: SMTO3; Reuters: SMTO3 SA and Bloomberg: SMTO3 BZ) (“Company” or “São Martinho”), one of the largest producers of sugar and ethanol in Brazil, announces the acquisition of 32.18% of Santa Cruz Açúcar e Álcool (Usina Santa Cruz) and 17.97% of Agropecuária Boa Vista S.A.

Context of the Transaction

A group of minority shareholders recently decided to sell their stake in Usina Santa Cruz and in its agricultural company -Agropecuária Boa Vista. Considering the high agricultural and operational synergy, the São Martinho group decided to acquire their stake and today it signed the documents necessary to implement the acquisition, under the terms approved by its Board of Directors.

Usina Santa Cruz has very similar characteristics to São Martinho and adopts a state-of-the-art model in the industrial and agricultural areas. Its indicators in critical success areas, such as mechanized planting and harvesting, are among the best in Brazil. It also has an energy co-generation project already in place and generating cash.

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Cordially,

João Carvalho do Val
Chief Financial and Investor Relations Officer

Felipe Vicchiato
Financial and Investor Relations Manager

Telephone: +55 (11) 2105-4100
E-mail: ri@saomartinho.ind.br
IR Website: www.saomartinho.ind.br/ir