Usiminas shares plunge as Brazil forces rival to cut stake

SAO PAULO Wed Apr 9, 2014 4:31pm EDT

Employees of Companhia Siderurgica Nacional (CSN) are seen at Volta Redonda, 90 miles (145 km) northeast of Rio de Janeiro, January 16, 2009. REUTERS/Fernando Soutello

Employees of Companhia Siderurgica Nacional (CSN) are seen at Volta Redonda, 90 miles (145 km) northeast of Rio de Janeiro, January 16, 2009.

Credit: Reuters/Fernando Soutello

SAO PAULO (Reuters) - Shares of Brazilian steelmaker Usinas Siderurgicas de Minas Gerais SA tumbled on Wednesday after antitrust regulator Cade ruled that a key rival had to reduce its stake in the company.

Preferred shares of the company, which is known as Usiminas, plunged as much as 10 percent before paring losses to 6 percent.

The ruling by Cade blocked a move by Companhia Siderurgica Nacional SA, known as CSN, to build up a big enough position in Usiminas to win a spot in the steelmaker's controlling ownership bloc.

CSN's chief executive, Benjamin Steinbruch, began the strategy in early 2011 as a way to win the same rights as other major shareholders in the event of a change of control in Usiminas, but Cade found the companies' ties created risks to competition.

By July 2013 CSN had become the largest single shareholder of Usiminas, with 14.1 percent of its common shares and 20.7 percent of its preferred shares, according to the regulator.

Cade said the number of Usiminas shares to be sold and the time line of the sale were confidential.

(Reporting by Luciana Otoni; Editing by Steve Orlofsky and Leslie Adler)