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Vale Sale of $1.5 Billion Unit to Help Shares, Itau Says

Aug. 29 (Bloomberg) -- Vale SA’s cargo unit may be worth $1.5 billion and an expected stake sale may benefit shares in the world’s third-largest mining company, according to Banco Itau BBA SA.

The valuation of Vale’s stock is likely to improve when the Rio de Janeiro-based company sells a stake in VLI, or Valor da Logistica Integrada SA, Itau BBA analysts Marcos Assumpcao and Andre Pinheiro said. A divestment would also benefit Vale by funding the unit without hurting Vale’s balance sheet, they said in a research piece dated yesterday.

“This deal could help investors and analysts to better value VLI into the company’s shares,” the analysts said.

Vale expects to announce the name of two VLI partners by the end of the month and a third one before year-end as the company finalizes the stake sale, Logistics head Humberto Freitas said on a conference call Aug. 8. The unit, which controls ports, terminals and more than 10,000 kilometers (6,215 miles) of railroad in Brazil, is seeking to invest 8.9 billion reais ($3.8 billion) to expand capacity, Vale Chief Executive Officer Murilo Ferreira told reporters last month.

In addition to VLI, Vale may also sell a 22 percent stake in Oslo-based aluminum producer Norsk Hydro ASA, vessels and smaller assets such as copper mines in Chile and coal ventures in Australia, the Itau analysts said in the note.

Vale dropped 1.4 percent to close at 30.80 reais in Sao Paulo today, the lowest since Aug. 8.

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

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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