German steelmaker ThyssenKrupp was surprised by the low value of bids for its Cia Siderurgica do Atlantico mill in Brazil and is seeking talks with bidders to raise the offer prices, the Agencia Estado news agency reported Saturday.
The two main bidders, Brazil's Cia Siderurgica Nacional and the Luxembourg-based Latin American steelmaker Ternium SA , counted on ThyssenKrupp's wanting to sell the money-losing mill quickly to drive down the cost of buying it, Agencia Estado said, citing a source with access to the negotiations.
Continue Reading Below
CSN is offering $3.8 billion for the CSA mill, which makes steel slabs, and a rolling mill in the U.S. state of Alabama. The two plants make up ThyssenKrupp's Steel Americas unit. CSA's slabs are shipped to Alabama for processing into coil steel for automobiles and other manufactured products. ThyssenKrupp paid 12 billion euros ($15.5 billion) to build the two mills.
The CSA mill, which opened only three years ago just outside of Rio de Janeiro, is 73 percent owned by ThyssenKrupp and 27 percent by Brazilian iron ore giant Vale SA . Both CSN and Ternium see CSA as a way to get new steel making capacity at well below the $10 billion it would cost to build a new mill in Brazil from scratch, the agency reported.
Brazil's state development bank BNDES is considering financing the winning bidder for CSA, though the guarantees offered as collateral to the bank by CSN are not yet considered sufficient, Agencia Estado reported, citing unnamed sources.
The government of Rio de Janeiro favors a purchase by Ternium because it is afraid that CSN's controlling shareholder Benjamin Steinbruch will move the company's headquarters to Sao Paulo as he did with CSN, depriving the state of some tax revenue, the paper reported.
A ThyssenKrupp spokesman in Germany declined to comment on the Agencia Estado report and said that the sale is going as planned. The company hopes to complete the sale of its CSA stake by the end of the company's fiscal year on September 30, he added.
A CSN press spokesman in Sao Paulo declined to comment, and a Ternium spokeswoman in Buenos Aires declined to comment as well.
The BNDES press office did not answer calls outside of normal business hours.
(Reporting by Jeb Blount, additional reporting by Tom Kaeckenhoff in Duesseldorf; editing by Gunna Dickson)