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Ternium Usiminas Buy Prompts Questions

Nov 29, 2011

Ternium’s agreement to acquire a BRL5.03bn ($2.7bn) stake in Brazil’s Usinas Siderurgicas de Minas Gerais (Usiminas) has left analysts scratching their heads. The global steelmaker will pay BRL36.00 per share for 139.7m common shares, or 27.7%, in a transaction seen as expensive. The price compares to a BRL19.70 previous closing price, and represents an enterprise value of 25x 2012 Ebitda. “Typically, Ternium has paid reasonable multiples of 6x in previous M&A transactions,” Luis Fornari, analyst at Barclays, tells LatinFinance. Usiminas’ stock trades at roughly a 50% premium...

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