(Bloomberg) – The Brazilian steelmaker CSN, which postponed its IPO plans for its cement business in July in the face of market volatility, looks to the acquisition of the local unit of Holcim Ltd.
The deal with Holcim increases CSN’s cement production capacity and could allay investor concerns about an overly aggressive expansion plan, CFO Marcelo Ribeiro said in an interview. The potential offer could raise about 3 billion reais ($ 570 million), he said.
The Sao Paulo-based company, which bought Elizabeth Cimentos in June, plans to use the proceeds of its upcoming IPO to fund 50% of the Holcim acquisition, while the other 50% will come from a bridging loan.
“Acquiring assets when they mature will significantly reduce the risk of the plan,” said the chief financial officer. “We don’t need to let Brazil grow at great speeds to get the return on our investment.”
Holcim’s assets will make CSN the second largest cement supplier by market share in the largest economy in Latin America. The bet is that the sector will return to historical production levels by 2022-2023 due to construction activity.
Cia Siderurgica Nacional SA, as it is officially known, floated its iron ore division on the stock exchange at the beginning of the year. The transactions are part of the billionaire family Steinbruch’s strategy to sell assets to reduce debt. The rail operator MRS, in which CSN has a 38% stake, could also be listed, said Ribeiro.
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