Companies circle for InterCement's assets

Companhia Siderúrgica Nacional (CSN) and a consortium led by Votorantim Cimentos, including Polimix and Buzzi, have made binding proposals for the purchase of the assets in Brazil of Loma Negra's parent company InterCement Participações (InterCement), according to a local source. 

InterCement has commented that it has received a series of inquiries and expressions of interest in its assets during recent months. BTG Pactual Bank is assisting in evaluating strategic alternatives, such as "private placement, merger, or partnership with a strategic player, or even a potential divestment, stated Intercement Participações. "On this context , a competitive process has been organised and is currently underway."

InterCement Participações' potential sale of its assets presents opportunities for CSN, Votorantim Cimentos and Huaxin Cement.

Moreover, it is understood from local sources that China's Huaxin Cement also made a proposal for InterCement assets, as the company's executives were in Brazil in the last few weeks to discuss a possible acquisition and InterCement's goal would be to raise at least BRL6bn (US$1.2bn) from the assets in Brazil. 

Potential sales of InterCement assets could include Loma Negra. InterCement plants have a production capacity of 12Mta in Brazil and 10Mta in Argentina, according to analysts UBS. The company faces debts of around US$1.5bn and sold its operations in South Africa to reduce its financial leverage last year, added UBS.

Possible price valuation
At BRL$6bn (~US$1.2bn), InterCement operations in Brazil would be valued at close to BRL500/t (or US$100/t), at the lower end of the valuation range of recent M&As in Brazil. The Loma Negra stock would amount to ~US$85/t. Lastly, UBS comment that InterCement has a controlling stake in Loma Negra (52 per cent), enabling a possible divestment of the company to come at a higher bid than the current stake's market value.