Brazilian conglomerate Camargo Corrêa Cimentos has offered to merge its cement business with Cimpor, which is the target of a takeover bid by another Brazilian company, steel and iron ore specialist CSN. Camargo’’s proposal is in stark contrast to a hostile takeover bid made by CSN in early January. That move was rejected by Cimpor’s board, saying it was "opportunistic" and significantly undervalued the company.
The second offer for Cimpor by a Brazilian company shows the growing clout of Brazil’s economy and the strong interest in the construction business as Brazil prepares to host both the Olympics and the World Cup in the next six years. Under the latest proposal, Camargo Corrêa would acquire a minority stake of up to 50 per cent of Cimpor’s voting capital and pay current Cimpor shareholders an extraordinary dividend of up to €350m. This would be financed by a capital injection by Camargo. The offer, which came during talks between Camargo and Cimpor executives in Lisbon earlier this month, was conditional on Camargo acquiring 15 to 25 per cent of Cimpor’s share capital.
CSN’s earlier offering of €5.75 a share for 100 per cent of Cimpor’s capital, valued the Portuguese major at about €3.86bn. Camargo’s bid now forces CSN to consider making substantial modifications to its offer for control. Cimpor said in a statement that the proposed deal would leave Camargo with less than 50 per cent of Cimpor’s voting capital, whereas CSN is seeking more than 50 per cent, at €5.75 a share. Cimpor’s present capacity is around 30Mta in countries including China, Egypt, South Africa, Spain, Turkey and Portugal. It is also the fourth largest cement company in Brazil itself. Camargo is the No. 2 cement maker in Brazil. CSN has said it will continue talking to Cimpor shareholders despite the board’s rejection, and said no price increase was on the cards for now. Analysts have suggested that a fair price of Cimpor, based on previous deals in the cement sector, would be between €6.6 to €7.8 a share.
Meanwhile Holcim has ruled itself out of a possible bid for Cimpor. "No plan, absolutely no plan," Paul Hugentobler, a member of Holcim’s executive committee, told reporters when asked whether Holcim was interested in Cimpor. At the same time, Lafarge has also earlier denied reports in Portuguese media it had a deal with Camargo to buy its own 17 per cent strategic stake in Cimpor.