CSN nears R$15bn sale of cement business
Companhia Siderúrgica Nacional (CSN) is expected to sign an agreement to sell its cement assets in about two weeks, as negotiations continue without an exclusive dealing agreement, Valor has learned. During this period, the group will receive final bids and select a buyer for the business.
Two potential buyers—China’s Huaxin and Votorantim Cimentos, in a proposed arrangement involving Italy’s Cementir—are working on the final terms of their revised offers. The bidder offering the highest price will acquire CSN Cimentos, according to two sources close to the negotiations. For that reason, one of the sources said, the plan is for neither bidder to receive exclusivity.
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At this final stage of the sale process, interested parties are expected to submit offers close to R$15 billion, in line with the valuation placed on the cement business by the group owned by Benjamin Steinbruch, according to one person familiar with the talks.
Negotiations have proceeded in parallel with both potential buyers. In the first round, they submitted offers described as “similar” and expressed interest in improving their bids.
If the selected buyer requests exclusivity, the period would be brief—just a few days—and intended solely to finalize and sign the purchase agreement, another source said.
At the binding-offer stage, it is common for sellers to enter into an exclusive dealing agreement so that the buyer can conduct a more in-depth review of the assets and refine its proposal. CSN, however, chose a different approach, allowing both bidders to proceed simultaneously.
In São Paulo’s financial district, Faria Lima, there had been speculation that the sale might be replaced by an initial public offering (IPO), but people familiar with the matter said the group has not considered that option.
If Votorantim Cimentos wins the contest against the Chinese bidder, its strategy would be to split CSN’s assets with Italy’s Cementir to avoid potential remedies imposed by Brazil’s antitrust regulator, the Administrative Council for Economic Defense (CADE).
CSN is Brazil’s second-largest cement producer, with annual capacity of about 16.3 million tonnes following a series of acquisitions. Votorantim is the industry leader, and a combination with all of CSN’s assets would lead to market concentration in certain regions, according to one source.
The sale of CSN Cimentos was announced as part of the group’s efforts to reduce its financial leverage. Net debt exceeded R$42 billion at the end of the second quarter, amid high interest rates and weaker cash generation in both its steel and iron ore businesses.
About 10 days ago, CSN announced an agreement to sell its German steelmaker, Stahlwerk Thüringen (SWT), to Spain’s Megasa (Bipadosa) for €550 million, or about R$3.1 billion at current exchange rates. Valor has learned that the deal is expected to close before year-end.
According to one source, the price offered by the Spanish buyer exceeded expectations and implies a multiple of about 10 times the steelmaker’s estimated earnings before interest, taxes, depreciation, and amortization (EBITDA).
Beyond providing financial relief to CSN, the announced transaction sends an important signal to the market, another source said: Steinbruch, who is known as an asset buyer rather than a seller, is willing to divest businesses or stakes in them to restore the group’s financial strength.
CSN and Cementir did not respond to requests for comment. Votorantim Cimentos said it would not comment. Valor was unable to reach Huaxin.
CSN will sell cement business to the highest bidder, without exclusivity for either contender
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