Brazilian steelmaker CSN's plans to grow through acquisitions encountered multiple setbacks on Friday after a deal in Spain collapsed and its ambitions to buy a stake in Brazilian archrival Usiminas faced a new hurdle. CSN called off the purchase of the cement and steel assets of Spain's Grupo Alfonso Gallardo, alleging a breach of contract.
The deal, which had been announced in May, involved the purchase of three plants in Spain and one in Germany as well as the assumption of $1.31 billion of debt. CSN "rescinded the purchase based on the terms previewed in the contract" and is "taking all the measures to defend its rights," according to a regulatory filing. A spokeswoman for Gallardo, based in Jerez de los Caballeros, Spain, did not have an immediate comment on the rescission.
Shares of CSN, the country's most profitable steelmaker, rose as much as 3.4 percent on Friday after the collapse of the Gallardo purchase eased concerns among investors that the company could overpay for assets to expand overseas. The stock was up 1 percent at 15.90 reais in early afternoon. The situation highlights the aggressive dealmaking ways of CSN Chief Executive Benjamin Steinbruch, who is also moving to buy his company a seat on the board of much bigger rival Usiminas.
That bid was dealt another blow on Friday after the group of shareholders that controls Usiminas denied they were considering putting part or all of their stakes up for sale. The group includes archrival Nippon Steel and local industrial conglomerates Camargo Correa and Grupo Votorantim. Shares of CSN have shed 37 percent this year on concern that Steinbruch could launch a spree of acquisitions as he seeks to diversify into mining, cement and logistics. An unsourced media report last week said CSN offered Votorantim and Camargo Correa as much as $3 billion for their combined 26 percent voting stake in Usiminas.
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