Nippon Steel, one of the two major shareholders at Brazil flats steelmaker Usiminas, doesn’t discard the possibility of an “exit clause” in its negotiations with Ternium, but said it rejects a bid proposal, a media report from Reuters said this week.
The company said it rejects the idea that one of the two parties should pay the highest bid to stay with the company, as they agree on an exit clause, as previously reported by SteelOrbis.
“The option proposed by Ternium sounds very weird for us. It is like preparing for a wedding at the same time divorce conversations are kept,” Nippon Steel and Sumitomo Metal do Brasil’s president, Hironobu Nose, told media this week.
“As Usiminas faces a very critical situation, we think that the best [approach] is how we can get the company out of it,” the executive said.
Last week, both Nippon Steel and Ternium made their arguments public at a filing at the nation’s securities exchange commission, CVM.
“With such a deadlock mechanism in place, the offered purchase price would surely become far higher than the market price of the shares and, as a result, the selling partner could exit from the company selling shares at a much higher price than that of the shares all the other shareholders in this listed company could sell in the market,” Nippon Steel argued at the time.
“On the other hand, the purchasing partner would be inclined to prioritize the recovery of such a huge investment for the purchase of the other partner’s shares and, therefore, would be likely to compel Usiminas to take operational measures not necessarily in its best interest, but possibly for the benefit of the buyer,” it continued.