Nippon Steel to boost stake in Usiminas

TOKYO, Dec 21: Japan's Nippon Steel Corp. said on Thursday it would boost its stake in Brazilian steel maker Usiminas, making the smaller firm an equity-method company in the latest cross-border tie-up in the rapidly consolidating steel industry.

Further details were not immediately available, but Nippon Steel said it would hold a briefing about the deal with Usiminas -- currently ranked 28th in the global steel industry -- at 4 p.m.

local time (0700 GMT).

The Yomiuri daily said earlier that Nippon Steel would buy a majority stake in the Brazilian firm's top shareholder Nippon Usiminas, effectively taking over Usiminas itself. Shares in Nippon Steel finished up 0.5 percent at 601 yen, outperforming a 0.22 percent rise in the benchmark Nikkei average The issue was also helped by a report from Merrill Lynch, which raised its target share price for the company to 650 yen from 550 yen.

The Nihon Keizai business daily said separately that the steel maker, which currently owns over 15 percent of Nippon Usiminas, was likely to spend more than 10 billion yen (.7 million) on the move.

Nippon Steel has been boosting business ties and increasing cross-shareholdings with its allies to create a web of interests and narrow the gap with the newly created steel giant Arcelor Mittal, which is about three times the size of the Japanese company.

The Yomiuri said Nippon Steel would turn Nippon Usiminas, which together with its allies controls 63.9 percent of Usiminas, into a subsidiary by acquiring its shares from trading houses and others.

Nippon Steel last month bought a 1.7 percent stake in Usiminas, a major supplier of steel to the Brazilian auto industry. The two companies jointly produce steel sheet for use in automobiles, and the Japanese company also has a stake in Nippon Usiminas. Nippon Steel last month also agreed to boost cross-shareholdings with POSCO, with the firms becoming top shareholders in each other, while tightening its capital and business ties with smaller Japanese allies Sumitomo Metal Industries Ltd. and Kobe Steel Ltd.

REUTERS