A CSN confirmed, in a relevant fact, that it once again renewed the exclusivity agreement negotiation for the purchase of InterCement, group company Mover (former Camargo Correa). Conversations between the two companies have been taking place since May, but are stuck on a specific point: defining the value of the cement company’s variable debt, which will determine the size of the business. And, according to sources, the closing of the deal is not expected to occur as soon as imagined.
According to the InvestNews reported in July, CSN is in no hurry. It is willing to wait for negotiations with creditors: Bradesco, Itaú and Banco do Brasil. It is estimated that the cement company’s debt to the three banks amounts to around R$4.7 billion.
In the conference call to talk about the company’s results, held last week, the CEO of CSN, Benjamin Quarrysaid that the CSN Cimentos Today it operates practically at full production capacity. And the growth of the affordable housing construction segment has everything to do with it. The expectation for 2025, according to CSN, is that civil construction GDP will at least grow.
At the same time, several infrastructure projects – such as sanitation, roads and energy transmission – are expected for next year. Until 2033, projects are planned by the government that total investments of R$1.6 trillion. All of this will require a lot of cement.
READ MORE: CSN renews (once again) exclusivity contract for the purchase of InterCement
“Cement has a certain future in Brazil,” said Steinbruch during the presentation of the company’s results. “It’s a product that’s missing, and we just don’t sell it anymore because we lack production capacity.”
In the material fact sent to the market, CSN stated that the exclusivity period will end if, at any time, the extrajudicial recovery plan, executed on September 16, 2024 by InterCement and certain creditors, is no longer valid.
CSN Cimentos made an offer of R$10 billion for InterCement, already assuming a debt that Mover has with Bradesco. But InterCement wants a higher value for its portfolio of 15 factories in Brazil and another nine in Argentina.
Other offers
The Steinbruch company became a favorite for acquisition due to the fact that it can absorb all of InterCement’s assets without the need to resort to stronger “remedies” from the Administrative Council for Economic Defense (Cade). The second largest company in the sector, with 20% of the market, CSN would probably not have to dispose of assets to integrate its competitor. This would make closing the deal faster.
This is the difficulty experienced by Votorantim Cimentoswho also dated InterCement. Leader in the sector, with a share of more than 30% of the market, according to analysts’ estimates, VC could have the purchase of 100% of InterCement blocked by Cade or be forced to give up some assets to keep it.
READ MORE: Majority in the STJ decides in favor of CSN in a R$5 billion claim against Ternium
Because of this limitation, Votorantim presented a proposal for InterCement in mid-February, but only for part of the portfolio. The offer excluded, for example, the purchase of production units in Argentina. This cooled Mover’s initial interest, which preferred to sell all assets together.
At the beginning of this year, there was speculation in the market about other interested parties besides Votorantim Cimentos and CSN. The Italian Buzzi Unicemowner of Brennand, the group Polimixowner of Cimento Mizu, and the Chinese Chinese e Huaxin Cement – the latter purchased InterCement assets in Africa last year – would have sought more information about the asset. In these cases, the operation could also occur more quickly.
Race for the stock market
The purchase of InterCement would be a strategic move for the two largest cement companies in the country, which are fighting for access to the stock market. The companies have already expressed their desire to pursue a listing as soon as market conditions become favorable.
No pitch to investors, it will sound much better – and, consequently, will pave the way for a better market valuation (“valuation”) – the one that presents itself as the market leader in cement, a position currently belonging to Votorantim Cimentos. To the source heard by the InvestNewshaving leadership may help, but it will not be the only item to be considered by investors.
