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CSN Slumps on Concern ThyssenKrupp Buy Would Erode Cash

Jan. 17 (Bloomberg) -- Cia. Siderurgica Nacional SA, Brazil’s third-largest steelmaker, fell to a three-week low on concern the company will overpay for ThyssenKrupp AG’s steel plants in the Americas at a time of slowing demand.

CSN slid 3.7 percent to 11.98 reais at the close of trading in Sao Paulo, the lowest since Dec. 28. Trading volume was more than double its three-month daily average. The benchmark Bovespa index gained 0.7 percent.

Sao Paulo-based CSN presented a $3.8 billion offer for ThyssenKrupp’s steel plant in Alabama and Rio de Janeiro and is the main candidate to purchase the assets together with ArcelorMittal, Dow Jones reported, citing unidentified sources. Investors are concerned that CSN is entering into a bidding war, Marcelo Varejao, an analyst at brokerage Socopa Corretora, said by phone from Sao Paulo today.

“Short-term investors see this as negative because there will be a cash disbursement and probably an increase in investments needed,” he said. “This is a bad moment for the steel industry and seems more appropriate to preserve cash.”

A CSN press official in Sao Paulo declined to comment on the report. ThyssenKrupp spokesman Stefan Ettwig said in an e-mailed statement that the company declined to comment.

An acquisition of ThyssenKrupp’s assets under terms reported by Dow Jones would by negative for CSN by pushing up debt and weighing on earnings before items, Deutsche Bank AG analysts Rodrigo Barros and Leandro Cappa wrote today in a note to clients.

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net; David Papadopoulos at papadopoulos@bloomberg.net

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