August 20, 2013 / 9:06 PM / in 4 years

UPDATE 3-Brazil's CSN, others mulling bids for Batista's MMX, sources say

By Sabrina Lorenzi

RIO DE JANEIRO, Aug 20 (Reuters) - Cia Siderúrgica Nacional SA, Brazil’s largest diversified steelmaking group, is interested in acquiring control of mining firm MMX Mineração e Metálicos SA from embattled tycoon Eike Batista, a source with direct knowledge of the situation said on Tuesday.

The source, who spoke on condition of anonymity because the negotiations remain private, declined to disclose the terms of the discussions, such as the possible value of MMX and whether an acquirer would assume the company’s debt.

Other companies are also interested in taking over MMX, a second source said, without citing potential candidates. Batista is breaking up his Grupo EBX conglomerate of mining, energy and logistics companies in an effort to help reduce the group’s $11 billion debt load.

Batista, 56, has already sold controlling stakes in two of Grupo EBX’s six publicly listed firms - power producer MPX Energia SA and port and logistics operator LLX Logística SA. Officials at MMX told investors last week on a conference call that the iron ore producer would soon have a new controlling shareholder, without elaborating on those remarks.

Spokespeople for MMX and CSN declined to comment. In a securities filing late on Tuesday, MMX said that it is currently looking for business opportunities that “enhance value creation for shareholders,” without saying whether any of those initiatives include a merger or acquisition.

A number of bidders for some of the assets controlled by EBX have emerged in recent weeks, attracted by what seems to be a breakup of the conglomerate and the exit of Batista from day-to-day operations. EIG Global Energy Partners LLC is interested in buying more assets from Batista, a source familiar with the U.S. fund’s plans said days after sealing a $560 million deal that gave it control of LLX.

Batista - forced by debt woes to dismantle an energy, port and mining empire that had been valued at $60 billion less than two years ago - is seeking partners or buyers for oil company OGX Petróleo e Gás Participações SA, shipbuilder OSX Brasil SA, coal miner CCX Carvão da Colombia SA and MMX.


Shares of MMX tumbled 4.6 percent on Tuesday to 2.27 reais while CSN dropped 3.5 percent to 8.57 reais.

CSN has been hobbled by failed attempts to grow in areas other than steel in recent years. The São Paulo-based company, controlled by Chief Executive Officer Benjamin Steinbruch, has for years tried unsuccessfully to acquire rivals in cement, mining and logistics, with shares weighed down by what investors see as a potential misuse of capital.

By buying MMX, analysts have said the company could increase reserves significantly and boost its shipping capacity since MMX has a port, but would have to spend heavily to reach full output capacity.

MMX’s Porto do Sudeste is scheduled to start operations by year-end, with the capacity to ship up to 19 million tonnes of iron ore a year.

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