The Brazilian unit of ArcelorMittal expects to conclude in the second quarter the takeover of rival Votorantim Siderurgia SA to become the country’s largest long steel producer, a senior company executive said.

Jefferson de Paula, ArcelorMittal executive vice president, said in a phone interview on Wednesday that ArcelorMittal’s long steel capacity in Brazil would reach up to 6 million tonnes per year after the tie-up.

Arcelor expects to conclude by April the asset sales demanded by the country’s antitrust watchdog Cade to approve the takeover, Paula added. Then Arcelor could proceed and conclude the Votorantim deal during the second quarter.

The executive said Arcelor is in advanced talks to sell two groups of assets to two different buyers. He declined to name the potential buyers and specific assets, citing a non-disclosure agreement.

Earlier on Wednesday, Cade gave the green light for the takeover, conditioned on asset sales.

The watchdog demanded Arcelor sell assets including a long steel producing unit in Espirito Santo state. The rapporteur on the case, Polyana Vilanova, said Arcelor had indicated the possible buyer but did not disclose any names.

Vilanova added that if Arcelor is unable to reach a deal for the assets, they will be auctioned. Arcelor’s executive said an auction will not be needed since negotiations are advanced.

Vilanova voted in favor of the tie-up, along with three Cade councilors. Two councilors voted against the deal.

A lawyer representing scrap metal suppliers to steelmakers, Leonardo Palhares, said the decision adds concentration to the long steel market in Brazil. “Gerdau SA and Arcelor now hold 80 percent of the market,” Palhares said after Cade’s approval.

Arcelor’s vice president said the group will consume around 35 percent of scrap metal acquired by the steel industry in the country.

ArcelorMittal’s Brazil unit and Votorantim SA announced in February last year a deal to combine their long steel operations in the country.

Votorantim will hold an undisclosed minority stake in the resulting business.

 

Source: reuters.com

Report Abuse