Camargo Correa Bids for Full Control of Portugal’s Cimpor

Camargo Correa Seeks Full Control of Cimpor
Bags of concrete stand at the Cimpor factory in Alhandra. Photographer: Mario Proenca/Bloomberg

Camargo Correa SA, Brazil’s No. 2 construction company, offered 2.48 billion euros ($3.32 billion) to buy full control of affiliate Cimpor-Cimentos de Portugal SGPS SA to combine cement operations.

Camargo Correa, through its Intercement Austria subsidiary, bid 5.50 euros a share for Cimpor, the Vienna-based unit said in a filing with the Portuguese securities regulator after markets closed on March 30. The offer is 10 percent more than Cimpor’s closing share price of 5 euros in Lisbon that day.

Cimpor shares climbed as much as 10 percent, the biggest gain since December 2010, and was trading up 8.8 percent at 5.44 euros at 11:50 a.m. in Lisbon. Camargo already owns 33 percent of Cimpor, which is based in the Portuguese capital.

Camargo Correa and Brazilian competitor Votorantim Cimentos SA, both closely held and based in Sao Paulo, bought separate stakes in Cimpor in early 2010, helping derail a hostile bid for Portugal’s largest cement company by Brazilian steelmaker Cia. Siderurgica Nacional SA. Votorantim owns 21 percent of Cimpor and is considering teaming up with Camargo for a joint bid, two people familiar with the matter said.

Camargo Correa said that, in addition to gaining control of Cimpor, it’s seeking to create “a coherent and stable shareholder structure” in the company. It also plans to combine its South American and Angolan operations with Cimpor, which does business on four continents.

Mafalda Correia, a Cimpor spokeswoman, declined to comment on the bid. Erik Burns, a spokesman for Banco Comercial Portugues, whose pension fund owns 10 percent of Cimpor, declined to comment.

‘Below Consensus’

The “price offered is below our valuation and below consensus,” Teresa Martinho, a Lisbon-based analyst at Banif Investment Bank, said in a research report today. “The key point is whether Correa will be able to grab control of Cimpor by acquiring relevant stakes from current key shareholders at the current bid price,” which “seems feasible.”

Portuguese state-owned bank Caixa Geral de Depositos SA said in a separate statement on March 30 it would sell its 9.6 percent stake to Camargo Correa, provided Caixa and Votorantim agree to end a shareholders’ accord, which gives each party the right of first refusal to buy the other’s stake.

Votorantim doesn’t plan to top the offer for Cimpor, while it may consider buying a stake in the cement maker and teaming up with Camargo Correa to take control, the two people familiar said. Votorantim may buy Caixa’s stake under its right of first refusal or decide to sell its existing stake, they said, declining to be identified because the talks aren’t public.

Evaluating ‘Alternatives’

Votorantim will analyze Camargo Correa’s offer and evaluate “all alternatives,” it said in a statement.

Camargo Correa and Votorantim held talks last October about buying the rest of Cimpor and dividing its assets, two people familiar with the situation said at the time. Camargo would keep Cimpor’s Brazil plants and Votorantim would take the rest, they said.

Brazil accounted for 30 percent of Cimpor’s revenue last year, overtaking the Iberian peninsula as the company’s biggest source of sales. Cimpor also has operations in the Middle East, Africa and Asia.

Infrastructure spending in Brazil is increasing as the country prepares to host the 2014 soccer World Cup and the 2016 Olympics. The government has said infrastructure investment of 140 billion reais ($77 billion) will be needed for the two events.

Cia. Siderurgica Nacional SA’s bid of 6.18 euros a share for Cimpor failed in February 2010 after garnering 8.57 percent of the stock. The offer valued the company at 4.15 billion euros. In 2000, Holcim Ltd. and Portuguese partner Semapa-Sociedade de Investimento e Gestao SGPS SA made an unsuccessful hostile bid for Cimpor.

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