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Steelmaker Gerdau to sell shares

Brazilian steelmaker Gerdau, controlled by descendants of the founding family, announced on 21 March that it plans to sell shares worth around $2.5 billion to fund its investment plans for the "next few years".

The biggest steel company in Latin America said that it will raise money for investment through a primary and a secondary offering of both voting and non-voting shares. The sale, scheduled to happen on 23 March, will see around 70 million voting new shares and over 200 million non-voting shares put up for sale.

Analysts say that the Gerdau family, which owns almost 32% of the company along with its holding unit Metalurgica Gerdau, will not see any change in their ownership, but the sale could possibly see a reduction in voting power for minority shareholders.

Andre Johannpeter, fifth-generation chief executive of Gerdau, said in a statement: "To meet growing demand in Brazil and abroad, we will continue to invest in expanding the supply of common long, special, and flat steel products in addition to increasing our own production."

The sale comes just a few days after the company reported an 18% rise in revenues for 2010 to $21.4 billion. The announcement of the sale has sparked speculations that the Porto Alegre-based Gerdau has plans to buy a stake in rival company Usiminas, Brazil's biggest producer of steel products for automobiles.

Analysts see this as Gerdau's attempt to take advantage of the country's growing steel market, buoyed by preparations to host the 2014 football World Cup.

Gerdau, founded in 1901 by João Gerdau, is headed by fourth-generation chairman Jorge Gerdau Johannpeter. The listed company last sold its shares to the public in 2008.

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