Klöckner acquires control of Frefer and debuts in the country
Valor Econômico
The distribution of flat steel in Brazil, and even of long and special products, has just gained a heavy weight competitor of international fame. The giant German Klöckner consummated earlier this month the purchase of the control of the Frefer Metal Plus group, headquartered in São Paulo. The value of the deal, for 70% of the capital of the São Paulo company, has not been revealed. The controlling family will remain a minority interest holder of Frefer, with 30%, and Christiano Cunha Freire was maintained ahead of the Executive Office.
With the acquisition, the second in the year, Klöckner & Co., headquartered in Duisburg, Germany, marks its entrance in emerging markets. Founded in 1906, it is the largest producer and independent distributor of steel and metal products and one of the main steel distributors and service center in the European and North American markets. Frefer is the third largest among the independent distributors of Brazil, not considering Gerdau. It had 8.1% of participation in the sales in the segment in 2010. The earnings of the distributor achieved R$ 340 million (US$ 193.2 million).
For the 70% of Frefer, sources of the sector estimate nearly R$ 150 million (US$ 93.8 million) have been paid, besides the assumption of debts of the same value. Freire, President of Frefer, avoided talking about the value of the transaction and he emphasized that the deal - in conversation for more than a year - was important for Frefer and for the sector in Brazil. "The company was strengthened with a heavy-weight partner, financially speaking, with capacity to invest resources and make investments with know-how in distribution and service center".
In the general ranking, which includes distributors connected to large steel industries, Frefer closed 2009 with 4.9% of participation, with 213 thousand tons sold. According to the National Institute of Distributors of Steel (Inda), Soluções Usiminas stayed in the leadership, with 16.8% - 731 thousand tons. The distributors of the steel plants responded for 49.6% of the total.
Klöckner is not connected to any steel company and one of its main clients in Europe is Volkswagen. Last year it had earnings of € 5.2 billion, with the 5.3 million tons of steel operated. In the first quarter of this year the earnings amounted to € 1.6 billion, growth of 51% compared to the same quarter of 2010. The German distributor informs it has more than 170 thousand active clients, supplied by nearly 280 distribution and service units spread through 15 countries in Europe and North America. The company had 10 thousand employees at the end of March.
The expansion of the German group has been driven by an aggressive wave of acquisitions started in 2006. There were four operations in that year. In 2007, that number tripled. In this period, the growth of Klöckner in assets abroad totaled 24 operations, predominantly in European countries and in the United States. Brazil is the first country outside those regions. The goal of the German company is to achieve a level of sales between 8 million and 10 million tons a year.