San Antonio, Tex.-based Valero Energy Corp. holds the highest bid to buy ethanol plants from VeraSun Energy Corp. The $477 bid has been accepted by the bankruptcy court overseeing the assets' auction.

In addition to the five plants and a sixth site under development in Valero's original bid, the bankruptcy court approved Valero's purchase of two additional ethanol plants from VeraSun. Together, the plants have an annual production capacity of 780 million gallons.

The aggregate purchase price of $477 million represented roughly 30% of the plants' replacement cost. The purchase price excludes working capital and inventory currently estimated at nearly $75 million. Credit Suisse advised Valero on the transaction.

As North America's largest petroleum refining and marketing company, Valero is a leading buyer of ethanol for blending in its gasoline, and its purchase of the plants will give Valero a dedicated supply of ethanol.

Valero plans to operate all of the plants through its subsidiaries.

"These are high-quality, relatively new assets in good locations for buying feedstocks," said Valero chairman and CEO Bill Klesse. "We expect increases in the Renewable Fuels Standard to continue."

While not new to investing in the alternative energy space, this is Valero's initial entry into ethanol production.

Valero makes $477M winning bid for VeraSun