Ternium to buy out Nippon, Mitsubishi for increased stake in Usiminas

On Wednesday, Latin American steelmaker Ternium announced it had entered into a share purchase agreement with Nippon Steel and Mitsubishi Corp. of Japan.

Luxembourg-based Ternium will pay $2.06 per ordinary share to Nippon and Mitsubishi to take over their participations in Usiminas’ control group.

The aggregate purchase price of the 153.1 million ordinary shares amounts to ~$315.2 million in cash.

Ternium in control

The control group holds the majority of Usiminas’ voting rights. The company’s employees’ pension fund controls 7.1% of the group.

Upon closing of the share purchase agreement, Ternium’s participation in the control group will increase from 51.5% to 83.1%.

Ternium’s Brazilian subsidiary Confab Industrial SA, Ternium Investments, and Ternium Argentina (collectively known as the T/T group) will hold an aggregate participation of 92.9% in the control group.

“This additional investment further strengthens Ternium’s commitment to Usiminas and the Brazilian market,” the company said in a statement.

Usiminas is a flat-rolled producer with ~3.2 million metric tons of steelmaking capacity. Based in Belo Horizonte in Minas Gerais state, it operates iron ore mines and flat-rolled steelmaking operations throughout the country.

“Ternium will continue working to take Usiminas to its full potential, aiming to enhance its competitiveness and value in the best interest of Usiminas and all its stakeholders,” Ternium added.

Nippon divestment

Nippon is set to receive ~$307.8 million to relinquish its ~149.4 million shares in Usiminas. Mitsubishi will get ~$7.4 million for its ~3.7 million shares.

Tokyo-based Nippon Steel has been making a series of divestments across its operations as part of its global growth strategy, which is shifting focus to the US, Indian, and ASEAN markets.

After “Usiminas posted a significant Q3 loss,” Nippon said it was “compelled to take a cautious view of the Brazilian market in the coming period.”