Brazilian steelmaker Gerdau has reached an agreement with Germany-based producer and distributor of steel and non-ferrous metals Klöckner & Co., to acquire the latter’s steel service center in Brazil for an undisclosed amount, subject to the approval of the Brazilian competition authority CADE, according to Brazil’s National Institute of Steel Distributors (INDA).
Klöckner entered the Brazilian market in 2011 by acquiring Brazilian distributor Frefer Metals Plus for around BRL 300 million. Frefer produces and sells steel products such as hot rolled coils (HRC) and sheets, heavy plates, steel strips and structural profiles. However, the company has not achieved its growth target for Brazil due to competition with steel companies such as Usiminas, Companhia Siderurgica Nacional (CSN), ArcelorMittal and Gerdau.
The acquisition is considered to be a strategic move by Gerdau, which has recently increased its HRC production capacity to 1.1 million mt per year. As a result, it will be able to support its expansion plans.
