Bloomberg reported that Confab Industrial SA jumped the most in five months in Sao Paulo after parent Tenaris SA raised an offer to buy out minority shareholders by 13%.
As per report, shares in the Brazilian maker of steel tubes rose by 23% to BRL 5.65 at the close of trading in Sao Paulo, the most since August 29th 2011. Tenaris gained 0.5% to BRL 15.61 in Milan.
Tenaris plans to offer BRL 5.85 per share of Confab or a premium of about 36% to Confab's 20 trading day volume weighted average price. The transaction may reach BRL 1.4 billion. Confab's minority shareholders have agreed to the revised offer.
Mr Christopher Palmer, who helps oversee USD 2.5 billion in Latin American assets, including Confab shares, as director of global emerging markets for Henderson Global Investors Limited in London, said that "This represents a good price for shareholders, particularly if you are a long term shareholder of the company. We are hoping some of the technical issues, which arose during the last offer, don't arise again."
The new offer for Confab is 13% higher than the BRL 5.20 per share Tenaris proposed on August 29th 2011. On November 3rd 2011, Tenaris withdrew that offer after shareholders requested substantially more and said there would be no second valuation.
Tenaris is seeking to expand control of Confab as demand increases for steel pipes used by oil producers including state controlled Petroleo Brasileiro SA. On December 12th 2011, Confab said it is in the final stages of negotiating a BRL 657 million contract to supply pipes and tubes for Petrobras' Rota Cabiunas offshore gas pipeline.
Analysts from Itau BBA said in a note to clients that "Tenaris's decision is likely based on a clearer strategy toward Brazil, which we view as late but positive. Since the Brazilian pre salt emerged as one of the most prominent markets for premium seamless pipes and connections around the world, the country has become a candidate for a more aggressive and focused approach by Tenaris, given the local content requirements."
(Sourced from www.bloomberg.net)
