Nippon Steel & Gerdau SA Block Takeover Bid From CSN
Japan’s Nippon Steel and Brazil’s Gerdau SA are trying to thwart a takeover bid from Cia. Siderurgica Nacional SA, or CSN, who has offered $2.9 billion bid for a stake in Usinas Siderurgicas de Minas Gerais SA or Usiminas, according to Bloomberg.
The article said, “Nippon Steel may exercise its right of first refusal and buy out its partners in the group that controls Usiminas,” to ward off CSN’s bid. Nippon Steel’s plan is to resell part of the 26% stake in Usiminas to Gerdau, held by partners Camargo Correa SA and Grupo Votorantim.
CSN has slowly been buying Usiminas shares since January, hoping to gain some control over the company. However, if Nippon Steel takes control of Usiminas, then “the Japanese steelmaker [could] pursue its global expansion,” analyst Kazuhiro Harada said.
“Brazil is one of a few very important bases for Nippon Steel as it seeks to expand globally,” said Harada, a senior analyst at SMBC Nikko Securities Inc. Usiminas “is best positioned to target the U.S., Latin America and Europe and Africa.”
CSN owns 15.15% of preferred shares and 11.29% of common stock in Usiminas as of Aug. 19 while Nippon Steel, Camargo Correa, Votorantim and Mitsubishi Corp. control Usiminas with 53.8% of the ordinary shares. Now, Nippon Steel and CSN are both considering buying the 10.1% voting stake held by the pension fund for Usiminas employees.
Usiminas, has sought protection with Brazil’s government, trying to block CSN’s takeover attempt. Apparently, “Usiminas representatives and antitrust officials from the finance and justice ministries met last week to discuss the stake purchases,” said an official. Usiminas confirmed the company met with antitrust officials to “seek clarification from a competitive standpoint” following CSN’s share purchases, the article said.