Gerdau SA (GGBR4), Latin America’s largest steelmaker, and shareholders are raising as much as 5.5 billion reais ($3.5 billion) in the region’s biggest stock sale in almost seven months. The stock fell to a 21-month low.
Gerdau sold 68 million new common shares for 15.60 reais each and 134.8 million new preferred shares for 19.25 reais apiece, while existing investors sold 69 million preferred shares, according to regulatory filings yesterday. The Porto Alegre, Brazil-based company may issue an additional 10.2 million common shares and 20.4 million preferred shares in a supplementary offer.
The share sale is Latin America’s biggest since Brazil’s state-run oil producer Petroleo Brasileiro SA raised $70 billion in the world’s biggest offering in September. This year through yesterday, 10 companies had sold shares in public offerings on the Sao Paulo exchange for a combined $2.78 billion, 50 percent less than this time last year.
“There are a lot of share offerings and in the medium term this has to be corrected,” Leonardo Alves, an analyst at brokerage Link Corretora in Sao Paulo, said in a telephone interview today. Gerdau will likely rebound as it’s better positioned than its rivals in the market for long steel used in construction, he said.
Gerdau’s common stock dropped 0.8 percent to 15.48 reais in Sao Paulo trading as of 4:05 p.m. New York time. The preferred shares, the most commonly traded class of stock, fell 2.4 percent to 18.91 reais, bringing the total loss in the past 12 months to 39 percent. It’s the lowest close since July 14, 2009.
Banco BTG Pactual SA, Banco Bradesco BBI SA and Banco Itau BBA SA managed the sale.
Four of this year’s five initial public offerings in Brazil were priced either at the bottom of initial estimates or below, according to data compiled by Bloomberg. QGEP Participacoes SA, the oil company owned by Queiroz Galvao SA, was the biggest IPO this year and sold shares at 19 reais each, 17 percent less than the lowest estimate set by the banks arranging the offer.
Gerdau is selling shares amid speculation that it may buy part of rival Usinas Siderurgicas de Minas Gerais SA (USIM5), the Brazilian steelmaker known as Usiminas.
“The market thinks that this money will be used for the acquisition,” Leonardo Brito, an equity analyst at Rio de Janeiro-based Teorica Investimentos, said in a telephone interview yesterday. “There is nothing clear yet.”
Nippon Steel Corp. said Feb. 18 it will retain control of Usiminas together with local partners following speculation that Cia. Siderurgica Nacional SA, Brazil’s third-biggest steelmaker, may challenge the group. Nippon, Votorantim Participacoes SA and Camargo Correa SA together own 53.7 percent of Usiminas.
CSN said March 29 that it aims to reach a 10 percent stake in Usiminas after adding shares between Jan. 26 and March 21 to increase its holdings to 8.62 percent.
Gerdau said in a March 23 prospectus that it may sell as many as 23.8 million common shares and 47.6 million preferred shares in supplementary offerings.
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