CSN Acquires Cement & Steel in Spain - Analyst Blog
23 Maggio 2011 - 12:00PM
Zacks
Brazil-based Companhia
Siderurgica Nacional (SID), or CSN recently announced that
the company will be investing in Spain’s cement and steel assets in
an effort to expand its portfolio in the country.
The company will acquire the cement
and four steel making assets of Grupo Alfonso Gallardo for
approximately $1.3 billion, incurring expenditure of roughly $768.5
million and debt assumption of $570.5 million. Completion of the
transaction is subject to regulatory approvals.
Grupo Alfonso Gallardo is Spain's
largest maker of steel reinforcing rods, or rebar. The assets
include Cementos Balboa, a cement-maker with an annual
production capacity of 1.4 million tons; rebar mill Corrugados
Azpeitia; and wire and wire-mesh mill Corrugados Lasao, besides the
two German steelmaking and marketing companies, Stahlwerk
Thuringene and Gallardo Sections.
Companhia Siderurgica produces hot-
and cold-rolled flat steel, galvanized sheets, and tin plates for
the packaging, automotive, and construction industries. The growth
prospects of CSN appear to be encouraging, considering the various
projects that are being carried out by the company and the growth
prospects of the global steel demand. Further, steel demand in
Brazil will probably get a boost as the country will host the 2014
World Cup soccer and the 2016 Rio de Janeiro Olympics.
Moreover, its entrance into the
cement business seems to be an added advantage. The acquisition of
the Spanish and German assets will enable CSN to diversify its
mining, cement and logistics businesses.
We believe that global steel demand
in the quarters ahead will probably be on the rise, benefiting from
the reviving global economy, increasing private and public capital
spending, falling unemployment levels and growth of the emerging
economies, especially China and Brazil. Moreover, Brazil is likely
to witness a rise in steel demand as the country will host
the soccer World Cup in 2014 and the Rio de Janeiro Olympics
in 2016.
Despite these positives, the growth
momentum gets restricted because of the possibilities of weak
results in the quarters ahead, while its mounting debt level, high
cyclicality, growing competition in the industry and rising
manufacturing cost all add to the growing concern. The company
faces stiff competition from Usiminas, Arcelor
Mittal (MT) and Gerdau (GGB).
GERDAU SA ADR (GGB): Free Stock Analysis Report
ARCELOR MITTAL (MT): Free Stock Analysis Report
CIA SIDERUR-ADR (SID): Free Stock Analysis Report
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