The guarantee that CSN received from CADE for the acquisition of Metalgráfica Iguaçu is what the company needed to buy the company, but it will have to transfer part of its shares, as a way of balancing the business and boosting the production of packaging
The Administrative Council for Economic Defense (CADE) granted the approval to Companhia Siderúrgica Nacional (CSN), last Monday (25/04), for the acquisition and incorporation of Metalgráfica Iguaçu, a manufacturer of metallic packaging. In addition, CSN will have to transfer part of its shares to the company's shareholders, as Cade seeks to expand Metalgráfica's production and bring about a parity in the transaction.
CSN manages to carry out the acquisition and incorporation of Metalgráfica Iguaçu after granting a guarantee carried out by CADE
In a somewhat risky strategy, but beneficial in relation to long-term production, Cade granted CSN the necessary guarantee for the acquisition and incorporation of Metalgráfica Iguaçu during this last week. However, CSN will also have to cede to the current shareholders of Iguaçu a percentage of shares that will be approved in extraordinary general meeting of companies to match the transaction approved by the board on Monday.
CSN is one of the largest players in the industrial production and steel industry in Brazil, with projects ranging from the extraction of iron ore to the production and sale of a diverse range of steel products, through its own business areas and those of its subsidiaries. Meanwhile, Metalgráfica Iguaçu operates in the manufacture of metallic packaging and holds, as its main controller, Merisa Engenharia e Planejamento, and is one of the great references within this segment in Brazil.
Thus, the acquisition of Iguaçu by CSN is a way of guaranteeing an expansion in the production of materials, in addition to other major pillars of the transaction, such as maintaining a manufacturer in the metallic packaging market and, consequently, the demand for metallic sheets; acquire more modern and productive metal packaging production lines; and guarantee the resumption and growth of Iguaçu's productive activity. Thus, Cade was able to verify these objectives as beneficial for both parties to the transaction for the approval of the guarantee released this week for the acquisition and incorporation of the company.
The Administrative Council for Economic Defense carried out extensive analyzes regarding the benefits of the acquisition of Iguaçu by CSN before releasing the guarantee for the merger
In addition to being important for the development of a series of investments in the production of metallic packaging and keeping the segment heating up in Brazil, the acquisition of the company by CSN is also considered by the Iguaçu shareholders as essential to clean up the accounts and avoid indebtedness. In this way, the metallurgical company obtained a great defense point for the approval of the necessary guarantee to carry out the transaction between the companies.
But that was not the only reason that led to the approval and CADE's General Superintendence found that there are factors that generate competitive pressures in a way that makes the exercise of market power by the companies involved unlikely. With that, it would become almost impossible to approve the endorsement for the purchase of the company with restrictions, which led to the quick release by Cade to CSN during this last week.
Finally, if there is no interruption in the process by any of the parties over a period of 15 days, the decisions of the General Superintendence will have a final character and the operations will be definitively approved by the antitrust agency, thus guaranteeing the completion of the incorporation of Iguaçu by CSN.