CSN’s takeover bid for Portugal’s Cimpor could rest on Chief Executive Officer Benjamin Steinbruch’s ability to assure skeptical shareholders that he will not overpay to expand into the cement business.
Steinbruch spent last week in Portugal explaining the benefits of an association with CSN to the cement company’s shareholders. The rejection of the unsolicited bid last week by Cimpor’s board will probably lead Steinbruch to sweeten CSN’s US$5.5bn offer, investors said.
Investors and analysts recall how shares of CSN dropped during its failed six-month battle for British steelmaker Corus in 2006 as uncertainty lingered over its international strategy.
CSN stock has recouped most of its 10 per cent tumble since the Cimpor bid came to light on December 18, on hopes that a deal will not come to pass. But analysts worry that the risk of overpaying for Cimpor is growing by the day.
"Investors believe that Benjamin wouldn’t do anything that could reignite memories of Corus," said analyst Pedro Galdi of brokerage SLW Corretora in Sao Paulo. "He’s trying to convince shareholders from both sides that the offer is fair and avert a bidding war."
Cimpor (CPR.LS) has jumped past CSN’s original bid price of 5.75 euros a share, trading at a nearly 12 percent premium at 6.43 euros on Tuesday. CSN, which rose in 10 of the past 12 sessions, was down 2.6 per cent at 57.10 reais in Sao Paulo.
Edited report from Reuters