Brazilian steel producer Companhia Siderurgica Nacional (SID | Friday announced the launch of a public offer to acquire cement manufacturer Cimentos de Portugal, SGPS, S.A. (CDPGF.PK)for EUR 5.75 per share. Companhia's bid values Cimentos de Portugal at EUR 3.86 billion, or $5.56 billion.
Cimentos de Portugal, or Cimpor, is a Portuguese company with presence in 13 countries in 4 continents including Europe, Asia, South America and Africa. In terms of market cap, Cimpor is within the top 10 largest cement makers in the world.
Cimpor occupies important positions in Brazil, Egypt, China, Spain, Turkey, South Africa, Tunisia, Morocco, India and Peru. In Brazil, it is ranked 3rd in terms of sales and 4th in production capacity. The company has also consistently recorded one of the highest EBITDA margins in the sector. Cimpor's operations in emerging markets currently account for around 60% of its revenues with substantial growth potential.
In 2008, Cimpor recorded net income of EUR 219 million, EBITDA of EUR 586 million and revenue of EUR 2.1 billion. As on September 30, the company had a total net debt of EUR 1.8 billion.
Companhia said it intends to acquire 100% of Cimpor's 672 million shares directly or indirectly through one or more of its subsidiaries. Companhia may use part of its available cash and/or finance part or all of the acquisition with financing lines from first-tier banks. The conclusion of the offer will be subject to acceptance by shareholders holding at least 50% plus one of the shares of Cimpor's capital stock. Companhia said that it expects to work together with Cimpor's management to successfully conclude the transaction.
Commenting on the acquisition, Chief Executive Officer Benjamin Steinbruch, Companhia stated, "Within CSN's business focuses, this is one of the best diversification and internationalization opportunities we have come across in markets with enormous growth potential."
Companhia is the second major steel company in Brazil and one of the largest in South America in terms of crude steel production. The company produces a broad line of steel products, including slabs, hot- and cold-rolled, galvanized and tin mill products. It is considered as one of the most productive steel-makers in the world, producing more than 6 million tons of raw steel and more than 5 million tons of laminates per year. Companhia also accounts for approximately 49% of the galvanized steel products sold in Brazil.
Companhia's steel products are being sold to customers in Brazil and 71 other countries in North America, Europe, and Asia.
According to Companhia, the acquisition will lead to the formation of one the world's largest cement producers, with an annual production capacity of 36 million tonnes of cement. The transaction will also expand and consolidate Companhia's presence in the cement segment, besides its leading position in the steel, mining and logistics segments. Companhia believes the transaction will increase its diversification in terms of products, new markets and geographical asset location, while reducing risks and adding value to its shareholders.
Last month, Companhia reported a sharp increase in its profit for the third quarter, despite lower revenues, helped mainly by a gain from foreign exchange variations, financial income and income from other operations. The company's net income for the quarter was R$1.15 billion, compared with R$39.63 million in the previous year. Net revenue declined to R$2.98 billion from R$4.03 billion a year ago. Steel sales volume for the period was up 4%, but crude steel production decreased 12% in the quarter.
SID is trading at $31.51, down $1.90 or 5.69%, on a volume of 3.94 million shares on the NYSE.
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For full details on Companhia Siderurgica Nacional S.A. (SID) click here. Companhia Siderurgica Nacional S.A. (SID) has Short Term PowerRatings of 4. Details on Companhia Siderurgica Nacional S.A. (SID) Short Term PowerRatings is available at This Link.
