Votorantim Cimentos Files for $5.4 Billion IPO

Brazil’s largest cement producer, Votorantim Cimentos S.A., filed a $5.4 billion maximum proposed initial public offering with the U.S. Securities and Exchange Commission (SEC) on April 17. The company plans to dual list on the NYSE and São Paulo Stock Exchange to raise funds to finance expansion, portfolio diversification and reduce debt. A request was filed with the Brazilian Securities Commission (CVM) on April 9.

Specific to North American acquisition or investment opportunities, the prospectus notes, “We will select companies or assets with potential to improve their operating and financial performances and generate synergies with our existing clusters.” In the U.S. and Canada, a publicly traded Votorantim Cimentos would “focus efforts on maximizing the benefits from expected market recovery, and expect to further improve the utilization rates of our [cement] plants as higher sales volume reduce our fixed costs per ton sold.”

Votorantim Cimentos is a key unit of the privately-held Votorantim Industrial, who would retain majority shareholder status if the IPO is cleared. “We believe we are uniquely positioned to maintain high returns on capital and generate significant value for our shareholders,” the prospectus states. “We intend to expand our operations internationally through a vertically integrated platform and footprint in high-growth markets. We will further maintain our track record of achieving cost efficiency through disciplined cost management policies and by leveraging our know-how and industry-leading technical expertise.”

Votorantim Cimentos would join Cemex S.A.B de C.V. and CRH Plc as multinational heavy building materials companies with dual listings on the lead exchanges in their home bases and the NYSE. Trading on the latter would be through American Depositary Receipts (ADR). Each Votorantim Cimentos ADR would represent a unit comprising one common and two preferred shares. Morgan Stanley, J.P. Morgan, Itaú BBA, BTG Pactual and Credit Suisse were listed as the joint bookrunners on the deal. No pricing terms were disclosed.

The São Paulo -based Votorantim Cimentos is the largest and most profitable heavy building materials company in Brazil, the fourth-largest cement market in the world. The company operates in Brazil, U.S., Canada, Bolivia, Chile, Argentina, Uruguay, Paraguay, Portugal and Peru. Votorantim Cimentos sales in 2012 were $4.6 billion, an increase of 9 percent over 2011 figures. Adjusted EBITDA increased 11 percent to $1.5 billion over the same period.

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