Bloomberg News

Vale Plans to Buy Back Up to 1.94 Bln Reais of Shares

June 22, 2006

Cia. Vale do Rio Doce, the world's largest iron-ore producer, rose after announcing that it plans to buy back as much as 1.94 billion reais ($873 million) of shares in the next six months.

Rio de Janeiro-based Vale's preferred stock, its most- traded shares, rose 69 centavos, or 1.7 percent, to 41.34 reais, at 11:47 a.m. New York time. Earlier, they rose as much as 3.1 percent to 41.90 reais, the highest since June 7. Before today's gains the stock had fallen 5.9 percent in the last 30 days.

``This is a very good move,'' said Christiana Viana, mining and metals analyst with AgoraSenior corretora, Brazil's largest stock brokerage. She has a buy recommendation on the stock. ``It shows that the company recognizes that their stock is undervalued and that they plan to support their shareholders.''

Vale is among a growing number of Brazilian companies buying back shares in a bid to lift share prices, which have suffered from concern rising U.S. rates will cut foreign investment into the country's securities. Brazil's benchmark stock index has plunged 24 percent in U.S. dollar terms since its record high reached May 9, the fifth-worst performing index among the 80 major indexes tracked by Bloomberg.

The board of Vale approved the plan to buy back up to 47.99 million preferred shares, or 5 percent of the company's outstanding shares, in a meeting yesterday, Vale said in a e- mail statement. Vale will spend as much as 1.94 billion reais if it buys the full amount of shares authorized, based on yesterday's closing price of 40.5 reais at the Sao Paulo stock exchange.

The stock price will rise to 65.13 reais by the end of the year according to an estimate by Viana.

Submarino SA, Brazil's biggest internet retailer, said June 14 that it plans to buy back up to 10 percent of its voting shares in the next 12 months. Gerdau SA, Latin America's biggest steelmaker, and its parent Metalurgica Gerdau SA said on May 26 they plan to buy back preferred shares in 60 days.

To contact the reporter on this story: Romina Nicaretta in Sao Paulo at o Jeb Blount in Rio de Janeiro at

To contact the editor responsible for this story: Laura Zelenko in New York at

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