CSN Tumbles After Increasing Usiminas Stake; Ternium Drops

Nov. 21 (Bloomberg) -- Cia. Siderurgica Nacional SA, Brazil’s third-biggest steelmaker, fell the most in more than a week after increasing its stake in Usinas Siderurgicas de Minas Gerais SA as the fight for control of its rival intensifies.

The stock dropped 3.2 percent to 15.08 reais at the close of trading in Sao Paulo, the most since Nov. 9.

CSN, as the company is known, now holds 20.14 percent of Usiminas’s preferred shares and 11.66 percent of the common shares, according to a regulatory filing Nov. 18 after the market closed. The announcement came one day after Ternium SA, the second-largest steelmaker in Latin America after Gerdau SA, said it’s in talks to buy a minority stake in Usiminas, sparking an 18 percent plunge in the Luxembourg-based company’s shares.

“The dispute should remain heated, which should make the acquisition price for Usiminas rise,” Leonardo G. Zanfelicio, an analyst at Sao Paulo-based brokerage Concordia SA, said in an e-mailed note today. “For now, we recommend caution on the involved companies, given the uncertainties surrounding this transaction.”

Ternium’s American depositary receipts slid 4.5 percent to $19.53 in New York. Usiminas dropped 0.9 percent to 11.87 reais as Brazil’s benchmark Bovespa index lost 0.8 percent.

CSN has been buying Usiminas shares since at least January, when it said it may boost holdings to a level that could alter management or the control structure. Ternium said it’s negotiating with members of the group -- Nippon Steel Corp., Camargo Correa SA, Grupo Votorantim and Mitsubishi Corp. -- that controls Usiminas with a 53.8 percent voting stake.

Ternium may have to offer 80 percent of the price paid in a possible agreement to all voting minority shareholders of Usiminas, Felipe Reis and Alex Sciacio, analysts at Banco Santander SA, said in a Nov. 18 note. That could increase the amount of the offer to $7.2 billion from $3 billion and may jeopardize the deal, the Sao Paulo-based analysts said.

To contact the reporter on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net