In a definitive legal victory, Companhia Siderrgica Nacional (CSN) saw its shares surge by 9.07%, closing at R$ 12.99 after reaching a high of R$ 13.44.
This jump came after Brazil’s Superior Court of Justice ruled in favor of CSN in a contentious $5 billion dispute with the Italian-Argentinian conglomerate Ternium.
The conflict arose over Ternium’s acquisition of a 27.7% stake in Usiminas in 2011. This acquisition did not include a public offer to buy out minority shareholders, despite CSN holding a 12.9% share.
The court’s decision underscored the alteration in control and management policies at Usiminas following Ternium’s purchase, necessitating the activation of the tag-along rights.
These rights are crucial for protecting minority shareholders during major corporate governance changes.
They ensure that minority shareholders can either exit the investment or sell their shares under equivalent terms as the major stakeholders.
Minister Antônio Carlos Ferreira, breaking a tie with his decisive vote, recognized Ternium’s increased sway in Usiminas’s decisions, particularly in appointing new executives.
He stressed the significance of this shift, which mandated safeguarding the rights of minority shareholders against sudden directional shifts in management.
Court Decision Acknowledges Minority Shareholders’ Rights
The court also highlighted the minority shareholders’ entitlement to a share of the control premium, acknowledging their role in the company’s successes.
Lawyer Ernesto Tzirulnik, representing CSN, praised the decision as a landmark in respecting minority shareholder rights.
He highlighted the judiciary’s commitment to maintaining economic order and fairness.
CSN has since informed the Securities and Exchange Commission about the ruling, promising to keep the market updated on subsequent developments.
This decision not only marks a significant win for CSN but also sets a precedent for corporate governance in Brazil.
It emphasizes the judiciary’s role in protecting shareholder interests amidst corporate power shifts.
This ruling resonates across the corporate landscape, signaling a shift towards more equitable treatment of minority investors in major corporate transactions.
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