CSN Said to Be Leading Bidder for ThyssenKrupp Americas Plants

Cia. Siderurgica Nacional SA (SID), Brazil’s third-largest steelmaker, has emerged as the leading bidder for ThyssenKrupp AG (TKA)’s Brazilian and U.S. steel-plant assets, said people with knowledge of the talks.

ThyssenKrupp could sign an agreement with CSN on the plant in the state of Rio de Janeiro and on its Alabama site in coming weeks, said one of the people, who asked not to be named because talks are private.

ThyssenKrupp, Germany’s largest steel producer, has spent the past year figuring out how to dispose of the unprofitable Americas plants. ThyssenKrupp Chief Executive Officer Heinrich Hiesinger is selling them as waning demand from the auto and construction industries and competition from China weaken prices and squeeze profit margins.

Stefan Ettwig, a spokesman for ThyssenKrupp, said the sale process is ongoing. He declined to elaborate. CSN declined to comment in an e-mailed statement to Bloomberg News.

There’s no guarantee a transaction will occur. ThyssenKrupp is also still negotiating with Vale SA, which owns a minority stake in the Rio site, and the Brazilian government on a deal for the assets, said the people. Vale’s press office in Rio de Janeiro didn’t have an immediate comment when contacted by Bloomberg News today.

If the parties can’t come to an agreement on a full sale of the Rio plant, another option ThyssenKrupp is considering is selling CSN a one-third stake, with Vale keeping a third and the German company holding the rest, said two of the people. If that plan were to succeed, the three may seek to raise about $750 million in capital to improve the plant, they said.

Shrinking Pool

The German company is unlikely to reach a deal with CSN before reporting fiscal first-half results May 15, said one of the people.

ThyssenKrupp shrank the pool of bidders for its U.S. and Brazilian assets last month, people familiar with the matter said then. The company is seeking more than $3 billion, according to those people.

ThyssenKrupp currently controls 73 percent of the CSA steel plant in the state of Rio de Janeiro. Vale, the world’s largest iron-ore producer and a supplier to the plant, owns the rest. The German company built the Brazilian facility, with a capacity of 5 million metric tons a year, to supply steel slabs to its mills in Calvert near Mobile, Alabama, and in Germany.

The Steel Americas business, labeled a discontinued operation, reported an adjusted loss before interest and taxes of 87 million euros the fiscal first quarter, compared with a loss of 288 million euros a year earlier, spokesman Kilian Roetzer said at the time. ThyssenKrupp said in February that profit for the whole company shrank 38 percent in the period.

To contact the reporters on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net; Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net; Cristiane Lucchesi in em São Paulo at clucchesi5@bloomberg.net

To contact the editor responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net

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