Corus & CSN proposed merger details are revealed
Europe's leading carbon steel producer Corus Group Plc introduced the details of their proposed non-binding merger agreement with CSN of
Brazil.
This merger is seen as a strategic development for Corus added up to its recent sales of
stainless steel facilities and its decision of selling the aliminium interests.
The existing CSN shareholders will be given shares of a new listed Brazilian company TopCo and in turn hold 37.6 percent of the share capital of the enlarged Corus.
Corus will be holding 62.4% shares of the enlarged group while CSN will hold the 37.6% shares. 46.5% shares of CSN are held by Vicunha Siderurgia SA which is a Brazilian company owned by the Steinbruch and Rabinovich families. According to the announcement Vicunha undertakes to vote its shares in CSN and TopCo in favour of each step of the proposed transaction.
The merger process will follow the two steps;
First CSN shareholders will exchange their shares in CSN for shares in TopCo so that CSN becomes a wholly-owned subsidiary of TopCo and then Corus will acquire CSN from TopCo in exchange of new Corus shares representing 37.6 percent of Corus enlarged share capital.
Corus is taking over CSN's $2.1bn debt which rises worries when added upto Corus's debt of £1.56bn. On the other hand the recent sales of
stainless steel interests for an amount of £359m and expected sales of £900m through the aluminium business will disburden the debts combined with the cost savings brought with the synergy.
The basic expectation from this merger is the cost saving that will mainly be obtained from the
iron ore supply by CSN's expanded Casa de Pedra mine. The annual capacity of the mine is planned to be brought up to 30 million tons per year.
The current proposal is a non-binding agreement with certain conditions which include the negotiation and execution of definitive binding transaction documentation, the financing of the enlarged group and the completion of appropriate due diligance. These conditions are expected to be accomplished by the end of 2002 when Corus and CSN will then be in a position to put a definitive proposal to their respective shareholders.