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CADE limits the Acquisition of Usiminas shareholdings by CSN


CADE approved with restrictions, the acquisition
published: Apr 10, 2014 05:20 PM last modified: Apr 12, 2016 02:20 PM

The Administrative Council for Economic Defense - CADE approved with restrictions, the acquisition of interest on social capital of Usinas Siderúrgicas of Minas Gerais S.A. - Uniminas by the Companhia Siderúrgica Nacional – CSN (merger file no. 08012.009198/2011-21). Although the operation was cleared by the antitrust authority, the approval was conditioned to the reduction of CSN’s stake in Usiminas. The deadline for CSN to divest  the acquired shareholdings of Usiminas and the percentage to be divested are confidential.

Through successive acquisitions on stock exchange, CSN became sole owner of great part of Usiminas’s shareholdings. CSN now holds 17.43% of the social capital: 14.13% are ordinary shares and 20.71% are preferential shares. The current controlling block of the company, composed by Grupos Nippon, Techint and Caixa dos Empregados da Usiminas, holds 63.86% of the voting capital.

The Reporting Commissioner of the case, Eduardo Pontual Ribeiro, stated that the absence of control does not exclude the possibility of anticompetitive effects derived from this operation, since the incentives for the companies to compete change. The Commissioner also highlighted that the limitation to the CSN’s participation on Usiminas is necessary since both steel industries are rivals on the “extremely concentrated flat steel market”. The companies are the two greatest of this segment established in Brazil.

Until the sale of the shareholding percentage determined by CADE is divested, the political rights derived from the shareholdings held by CSN on Usiminas will remain suspended. Thus, it is forbidden the direct or indirect indication, by CSN, of any member for the Management Board, Board of Auditors and other bodies of management and supervision of Usiminas, among other restrictions. 

During the period of compliance with CADE’s decision the rent of CSN’s shareholdings will be allowed, since it is carried out through the Stock Exchange, in small parts, in an impersonal manner and on the terms and limits of the operations regulated by BM&F Bovespa. Contracts outside the Stock Exchange and of these limits, such as private contracts, are forbidden. The determination seeks to exclude the possibility of directing to one or more shareholders aiming at using  the political rights related to CSN shareholdings, either isolated or together. 

The restrictions to the operation were established by mutual agreement between CADE and CSN, through the signature of a Performance Agreement (TCD for its acronym in Portuguese).

CADE also fined CSN on BRL 671 thousand for notifying  the operation after the legal deadline. The acquisition was only presented to the Brazilian System of Competition Defense in November 2011, although the submission was mandatory since January of that year.