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Steelmaker CSN Makes a $1 Billion Bet on Brazilian Construction

This content was published on September 10, 2021 - 15:14

(Bloomberg) -- Steelmaking group CSN is increasing its exposure to Brazilian construction with a $1 billion purchase of Holcim Ltd.’s local cement unit. 

The acquisition will make the group led by the billionaire Steinbruch clan one of Brazil’s top cement producers and may be a catalyst for resuming an initial public offering of the cement business. Brazilian construction is riding an economic recovery that analysts forecast at 5.2% this year from last year’s 4.1% contraction. 

CSN shares rose as much as 3.5% in Sao Paulo Friday, with Moody’s saying the acquisition won’t jeopardize its sound liquidity while providing further cash-flow diversification.

The Holcim operations will boosts CSN Cimentos’s production capacity to 16.3 million metric tons a year. It’s CSN’s second cement deal in less than three months after picking up Elizabeth Cimentos for 1.08 billion reais ($207 million) in late June. 

For Holcim, the deal will free up cash to invest in its Solutions & Products business. The Swiss cement maker agreed to sell its Brazilian unit as it divests non-core assets to cut debt. Since announcing a turnaround plan in 2018, Holcim has sought to prune activities outside Europe in countries including Indonesia and Malaysia.

Latin America remains a strategic region for Holcim, the company said, adding that it recently invested in a clinker line in Argentina and a new grinding station in Mexico.

In April, Bloomberg reported Holcim was considering a sale of the unit, which could be valued at as much as $1.5 billion, citing people familiar with the matter.

The Holcim unit transaction requires Brazilian antitrust approval.

©2021 Bloomberg L.P.

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