Bids came in for Namisa, CSN’s iron ore mining complex, but there are doubts whether the owner will part with the asset at valuations which are much lower than it was expecting. Analysts estimate it is worth $5-$8 billion, well below the up to $11 billion CSN wanted. Bankers away from the process say the highest bid was some $8.5 billion.
A Japanese consortium including Nippon Steel, Itochu and Mitsubishi, advised by JPMorgan, was heard presenting a strong offer. Chinese steelmaker Shangang Group is also heard looking at the asset, though its bid could be losing traction because of slow decision making. Severstal, the Russian group, is also apparently participating.
CSN CEO Benjamin Steinbruch is known for having walked away from offers he claims do not fully value his assets. Goldman is advising the steelmaker.
Autlán Momentum Builds
The auction of Minera Autlán was heard gaining momentum, with a number of large strategic bidders apparently readying offers. Brazilian mining giant Vale is understood to be among foreign parties interested in scooping up the Mexican manganese and ferroalloys producer. It is competing with global steel and mining players including Eramet, BHP Billiton, Tenaris, Citic and Glencore, according to executives away from the seller.
Vale has a substantial M&A cash warchest and may seek to extend its dominance in manganese beyond its already abundant supplies in Brazil, say analysts. Autlán presents some interesting synergies, including the chance to mix Vale’s high-grade manganese with Autlán’s low-grade output to produce ferroalloys.
The price of manganese has soared in recent months thanks to high demand from steel producers. Autlán’s market cap stood at $2.03 billion mid-September, which suggests it could go for over $2.40 billion if a buyer agrees to a 20% premium, in line with competitive auctions.
Bids were due by the end of September. Autlán’s adviser Lehman filed for bankruptcy last month.
Company Positive on Brascan Buy
Fitch put the B+ rating of Brazil’s Company on rating watch positive following its acquisition by Brascan Residential Properties (BRP). Once concluded, Company will become a full subsidiary of BRP and its credit strength will benefit from a stronger shareholding, capital and business structure, lower leverage ratios and better operational ratios, says Fitch.
“This merger will eliminate the liquidity discount [for both companies] which should lead to significant appreciation [in the shares,]” says Nick Reade, CEO of BRP. Shares of both Company and BRP have been trading at heavy discounts to net asset value over the past several months as investors fled stocks with low liquidity.
The transaction should be formalized by October 22 and involves a 200 million reais payment by BRP to Company shareholders, in addition to new shares. BRP will use 100 million reais in cash, while the remaining 100 million reais will come from Company dividends.
Meanwhile, Lojas Renner, the Brazilian department store chain, is paying 670 million reais for its rival Leader. Renner agreed to buy 100% of the shares for an initial payment of 440 million reais.
VCP Gets Aracruz
Brazil’s Votorantim Celulose e Papel (VCP) has agreed to acquire a 28% stake it does not own of Aracruz, paving the way to the creation of one of the top two paper and pulp companies in the country, alongside Suzano. Grupo Votorantim, VCP’s parent, and Grupo Safra, a financial investor in Aracruz, will jointly control shares in the new company with a 50% stake, while VCP will own the rest.
Elsewhere, Magnesita Refrataríos agreed to buy German peer LWB Refractories from private equity firm Rhone Capital for €277 million in cash and stock. Magnesita plans to use €50 million cash and a loan of about €330 million from JPMorgan, its advisor on the deal, to refinance LWB debt.
And Brazil’s Hypermarcas has agreed to buy cosmetics maker Niasi Industria de Cosmeticos for 366 million reais. The owner of several consumer products brands will pay 233 million reais cash, assume 40 million reais in debt and pay the remaining 93 million reais within five years. Banco Safra advised Niasi. LF