April 12 (Bloomberg) -- Usinas Siderurgicas de Minas Gerais SA, Brazil’s second-largest steelmaker, had the biggest two-day fall in almost eight months on concern that Cia. Siderurgica Nacional SA will sell its Usiminas stake.
Usiminas voting shares fell 5.3 percent to 16.90 reais at the close in Sao Paulo, extending its decline in the past two sessions to 12 percent, the most since Aug. 16. The stock fell as much as 10 percent today, the biggest intra-day drop since November 2008. CSN rose 2.7 percent to 17 reais.
Late yesterday, CSN, as Brazil’s third-largest steelmaker by output is known, had its voting rights in Usiminas suspended and was barred from buying more shares by the country’s antitrust regulator. CSN faces a fine of 10 million reais ($5.5 million) if it doesn’t comply, the regulator, known as Cade, said in a statement yesterday.
“Yesterday’s Cade ruling may accelerate CSN’s decision to sell its stake in Usiminas,” Felipe Reis and Alex Sciacio, Banco Santander SA analysts, said in a research report today. “Its main potential buyer is out of the game.”
CSN had been buying shares in Belo Horizonte, Brazil-based Usiminas for more than a year to have more influence in decisions made by its bigger competitor. The company held 20.14 percent of Usiminas preferred stock and 11.97 percent of its common shares as of Dec. 31, CSN said March 26. CSN still has rights to Usiminas dividends, Cade said.
An official at Sao Paulo-based CSN declined to comment.
The regulatory ruling also prevents CSN from appointing members to Usiminas board, fiscal council or other management boards, according to a separate statement Usiminas sent to Brazil’s securities regulator yesterday.
CSN can’t convert Usiminas preferred shares into voting ones or use its shareholder position to obtain “commercially sensitive information,” according to the ruling.
Usiminas plans to hold its annual shareholders’ meeting in Belo Horizonte on April 25, according to the company’s website.
The regulatory ruling may accelerate a decision by CSN to sell its Usiminas stake as it may become less strategic, Barclays Plc analysts led by Leonardo Correa said in a research note yesterday.
“One interpretation could be that this ruling should make CSN’s current position in Usiminas less appealing to hold on to,” the analysts said. “We calculate that CSN would be losing close to 810 million reais on its investment.”
CSN will take “all measures” to preserve its Usiminas investment, Investor Relations Executive Officer David Salama said during a conference call with investors March 27, without elaborating.
CSN’s efforts to alter Usiminas’s management or control structure were thwarted last year when the Techint Group, through its Ternium SA and Tenaris SA units, paid 5.03 billion reais for a 27.7 percent voting stake in Usiminas, joining Nippon Steel Corp. in the steelmaker’s controlling group.
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