CSN takes important step with acquisition, according to analysts; Cade’s approval, however, deserves attention.

SAO PAULO – Companhia Siderúrgica Nacional (CSNA3) announced this Friday (10) that its subsidiary CSN Cimentos signed a contract to acquire 100% of LafargeHolcim in Brazil, for approximately US$ 1.025 billion (or R$ 5.3 billion).

In a report, the analysis house Levante says it sees the transaction as positive for the holding CSN and expects a slightly positive impact for the shares in the short term.

This Friday, around 12:00 pm (GMT), CSNA3 shares were up 2.2% on the Brazilian stock exchange, trading at R$34.97. In the year until Thursday (9), the company’s share recorded high of 15% on the Stock Exchange.

“Now, moving into a new phase of the company, with a lower leverage target and a much healthier capital structure, CSN had enough ‘fire power’ to incorporate important assets and consolidate the cement market, preparing the ground for the IPO of the ‘purple bag’ cement company”, write analysts at Levante.

The team highlights that Lafarge’s assets run at a lower productivity than that of CSN and Elizabeth – recently acquired – the latter, with more modern plants and structure.

This allows, according to Levante, that the projected synergies and the integration of operations provide scale gains and greater profitability, gradually reaching the profitability of CSN Cimentos – currently around 40% to 45% of the Ebitda margin (earnings before interest, taxes, depreciation and amortization) at current market price levels of cement.

Guide Investimentos also sees the ad as positive. According to analysts, the acquisition brings strength to the business, significantly expanding production, which may attract greater demand from the investor’s point of view for participation in its initial public offering of shares (IPO), when it occurs. .

In the evaluation of Bradesco BBI, the transaction represents a positive step for CSN, in line with the company’s strategy of expanding its operations in the domestic cement market through mergers and acquisitions. “The acquisition should lead CSN Cimentos to a total capacity of 16.3 mtpy, making the company the third largest player in the Brazilian market after Votorantim and InterCement Brazil”, he highlights.

Bradesco BBI maintains its recommendation performer (above the market average) for the company’s shares, with a target price per share of R$67. “CSN’s shares hardly reflect the new reality of the company (with its steel, mining and cement operations registering record numbers) , as well as strong cash flow generation and dividend payout potential, now that the deleveraging saga is over,” writes the analysis team.

Morgan Stanley writes, in a report, that an initial assessment suggests that the valuation paid by CSN seems attractive, lower than the one paid recently by the company in the assets of Elizabeth Cimentos.

Analysts point out, however, that the green light from the Administrative Council for Economic Defense (Cade) could be a problem, as Lafarge’s assets are located mainly in the southeast region of Brazil, which is CSN Cimentos’ main market. “We believe that regulatory approval may come with some ‘remedies’, requiring CSN Cimentos to sell some of its assets in that region,” analysts write.

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