UPDATE: Techint Group To Pay About $2.7 Billion For 28% Stake In Usiminas
28 November 2011 - 1:19PM
Dow Jones News
After more than a year of negotiations, Argentina's Techint
group has emerged as the victor in the chase to buy out shares in
Brazilian flat steelmaker Usinas Siderurgicas de Minas Gerais S.A.
(USIM4.BR), or Usiminas, which were put up for sale by Brazilian
industrial groups Votorantim and Camargo Correa.
The Techint group has offered 36 Brazilian reais ($19) per
voting share, which the group said was a premium of 41% over the
average trading of the last six months, based in U.S. dollars. The
companies said the total cost for the 27.7% of Usiminas's voting
shares would be about $2.7 billion.
Ternium had confirmed that it was in talks to buy the stakes on
Nov. 17. On that day, it's shares plunged 9%, to $22.99; the shares
have since sunk below $19, although they recovered slightly on
Friday, ending nearly 4% higher at $19.32.
A number of possible bidders have been rumored to been
interested at different points of the process, including Brazilian
steelmakers Gerdau SA (GGB, GGBR4.BR) and Companhia Siderurgica
Nacional SA (SID, CSNA3.BR), according to the web site of the O
Estado de Sao Paulo newspaper.
CSN has over the last year bought up Usiminas shares on the open
market, and owns 20% of Usiminas's preferred stock and nearly 12%
of voting stock. That had prompted speculation that CSN might be
preparing a hostile bid for Usiminas.
The Usiminas shares will be bought by three Techint companies:
Ternium SA (TX) and its Argentine subsidiary Siderar SA (ERAR.BA,
SDDFF), and Confab Industrial SA, a subsidiary of another Techint
company, Tenaris S.A. (TS, TEN.MI).
Ternium and Siderar will finance their BRL4.1 billion share,
equivalent to about $2.2 billion, with cash on hand and debt,
Ternium said in a statement. Confab has agreed to buy 5% of voting
shares at a total cost of around $500 million, Tenaris said in a
statement.
The three buyers will join the group of controlling
shareholders, which also includes Nippon Steel Co. (5401.TO, NISTY)
and the Usiminas' employees union, Caixa dos Empregados Usiminas,
or CEU. As part of the transaction, Nippon Steel plans to increase
its stake in Usiminas, buying a further 8.5 million ordinary shares
from CEU.
The transaction is expected to close in January 2012, Tenaris
said.
Camargo Correa and Votorantim have reportedly been looking to
sell their Usiminas stakes for some time. Votorantim on Sunday said
that it wants to concentrate on their core businesses, including
cement, cellulose, orange juice and long steel.
Meanwhile, there's been speculation that Ternium may now pull
out of its plans to build a steel mill in the Acu port of LLX
(LLXL3.BR), owned by Brazilian billionaire Eike Batista. The UBS
investment bank recently said that fast-growing oil industry
business could "more than offset" the potential withdrawal of
Ternium.
-By Matthew Cowley, Dow Jones Newswires; +55 11 3544 7082;
matthew.cowley@dowjones.com