Votorantim takes another step to leave steel market
Brazilian infrastructure group Votorantim is expected to end this month, with great relief, the sale of its steelmaker in Colombia, in a deal negotiated in November with two local funds - Trinity Capital S.A.S. and Structure S.A.S. Banca de Inversión.The deal involving Boyacá-based Acerías Paz del Río depends on a public offering of shares to be made in the local stock exchange later this month. The offering will allow the acquisition of the remaining shares beyond the 82.42% stake held by Votorantim.Votorantim will receive $19.2 million for its 20,499,067,131 shares, considering the price agreed with the funds, of 3.65 Colombian pesos each. That means a little more than 3% of the total disbursed to buy the asset in March 2007 and in operations in the following years.The date of the offering is currently being analyzed by the Financial Superintendence of Colombia. The local securities market authority had 30 days from the communication (November 11) of the pre-agreement between Votorantim and the funds to set the day.By getting rid of Paz del Río, the group takes another step towards leaving the steel industry after making the decision in 2017. A year later, it sold a controlling stake in the Brazilian business to ArcelorMittal in exchange for 15% of the rival’s long steel business. This stake is expected to be negotiated with ArcelorMittal at the end of 2022, when it can exercise a put option - which gives it the right to sell the asset.The acquisition of the Colombian steel mill, located in the Belencito district, 200 km far from Bogotá, took place amid fierce competition with ArcelorMittal, Gerdau and CSN. The auction in the Colombian stock market took five hours. ArcelorMittal battled for the asset until the final bid.Votorantim won by paying $491 million for 52% of the controlling shares, which belonged mostly to the employees and the Colombian government, paying a premium of 157%. The group later spent more than $100 million to reach the 82.42% stake.Those were times of euphoria in the mining and steel industry around the world. M&A activity was intense, and all groups active in the sector wanted to mark territory - globally or regionally.Paz del Río is a medium to small-sized steel mill that makes around 350,000 tonnes of rolled steel per year. Most of its facilities are outdated, except for a billet rolling mill that started operating at the end of 2007. The steel company owned iron, coal and lime mines, which enticed Votorantim to...
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