Ternium SA and Tenaris SA have agreed to buy 27.7% voting stake in Usinas Siderurgicas de Minas Gerais SA for BRR 5.03 billion (USD 2.66 billion), giving them entry into the group that controls Brazil’s second largest steelmaker.

Ternium SA announced that it has entered into share purchase agreements with Camargo Correa, Votorantim and Caixa dos Empregados Usiminas, pursuant to which it expects to acquire, together with its Argentine subsidiary Siderar and Confab Industrial SA, a subsidiary of Tenaris SA, 139.7 million ordinary shares of Usinas Siderurgicas de Minas Gerais SA or 27.7% of the voting capital, at a price of BRR 36 per ordinary share (approximately USD 19.0), which represents a premium of approximately 41% to Usiminas' ordinary share last six months average US dollar price.

Ternium and Siderar will finance their BRL4.1 billion share (approximately USD2.2 billion) with cash on hand and debt.

Ternium, Siderar and TenarisConfab will join Usiminas' existing control group through the acquisition of 84.7, 30.0, and 25.0 million ordinary shares, respectively. In addition, Nippon Steel will acquire from CEU 8.5 million ordinary shares. As a result of these transactions, the control group, which holds 322.7 million ordinary shares representing the majority of Usiminas' voting rights, will be formed as follows: Nippon Group 46.1%, Ternium/Tenaris Group 43.3%, and CEU 10.6%.

In addition, Ternium entered into an amended and restated Usiminas shareholders' agreement with Nippon Steel, Mitsubishi, Metal One and CEU, governing Ternium, Siderar and TenarisConfab's rights within the control group. Most decisions in that group are subject for its approval to a 65% majority of the control group shares.

With strategically located facilities near the main consumers of steel in Brazil and iron ore mines in the Serra Azul region, Usiminas is the largest flat steel producer in the country, with 9.5 million tonnes of crude steel capacity and the leader in the Brazilian flat steel market. Usiminas is organized under four main business units: Mining, Steel, Steel Processing and Capital Goods. In 2010, Usiminas had net sales of BRR 13.0 billion (approximately USD 6.9 billion).

These transactions are subject to customary conditions and applicable corporate approvals by the Nippon Group. Closing is expected to occur in January 2012.