Vale (RIO) Analyzing Possible Acquisition of Two Paranapanema Units

Dow Jones reported yesterday that Companhia Vale do Rio Doce, or Vale (NYSE: RIO), has denied rumors that it is in talks to purchase a Brazilian metals holding company, Paranapanema.

According to the report, Vale said yesterday that it is, however, "analyzing the possible acquisition of two Paranapanema units", specifically, its copper company, Caraiba Metais and its fertilizer unit, Companhia Brasileria de Fertilizantes, or Cibrafertil. Moreover, Vale also said that it has not yet presented a proposal to Paranapanema for the acquisition of its two subsidiaries.

Interestingly, Paranapanema's controlling company, Previ, holds a stake in Vale as a member of its controlling block of shareholders and its President, Sergio Rosa, is currently the Chairman of Vale's Board of Directors. Responding to the recent claims that Vale could be looking at the fund's Paranapanema business, Previ last week admitted that it was interested in divesting Paranapanema.

Companhia Vale do Rio Doce, or Vale, is a metals and mining company. The company is also a producer of iron ore and iron ore pellets. It also produces bauxite, alumina, aluminum, copper, coal, cobalt, precious metals, potash and other products.

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