UPDATE 1-Ternium buys Brazil's Usiminas stake from Previ as rift heats up

jueves 2 de octubre de 2014 20:26 GYT

(Adds details on Previ purchase, background on the shareholder dispute, share performance in paragraphs 1-9)

By Guillermo Parra-Bernal and Alberto Alerigi Junior

SAO PAULO Oct 2 (Reuters) - Steelmaking group Ternium SA agreed on Thursday to pay 616.7 million reais ($249 million) for an additional stake in Brazilian rival Usiminas, as a tussle for control of the country's largest flat steel producer heats up.

Under terms of the deal, Ternium acquired 51.4 million common shares from Caixa de Previdência dos Funcionários do Banco do Brasil, the pension fund owned by workers of state-run Banco do Brasil SA known as Previ. Ternium paid 12 reais per common share of Usiminas, representing an 82 percent premium to the stock's close on Wednesday.

Following the purchase of the Previ stake, a Ternium-led group will own 191.1 million common shares of Usiminas, or about 38 percent of the latter's voting capital. Usiminas is formally known as Usinas Siderúrgicas de Minas Gerais SA.

Ternium, which is controlled by Italian-Argentine industrial conglomerate Techint Group, joined Japan's Nippon Steel & Sumitomo Metal Corp as part of Usiminas' controlling bloc in November 2011.

"During the term of the Usiminas shareholders agreement, Ternium will be required to vote these shares in accordance with the decisions of the Usiminas controlling group," Ternium said in a statement.

Last week, a rift between Nippon Steel, which owns slightly less than 30 percent of Usiminas, and Ternium ended with the dismissal of Julián Eguren as chief executive of Usiminas. Eguren, who since taking office in early 2012 brought Usiminas back to profitability by slashing costs and easing bottlenecks, was allegedly fired over bonuses.

Apart from questioning future strategy and capital allocation under a new chief executive, investors worry that Eguren's departure may worsen a drop in earnings amid a sharp slowdown in Brazil, slumping global iron ore and steel prices and a higher share of exports in the company's sales mix. Steel products in Brazil sell at a higher price than globally.   Continuación...