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Nippon Steel Corp. and Brazil’s Gerdau SA are in talks to stave off a rival $2.9 billion bid for a stake in Usinas Siderurgicas de Minas Gerais SA, or Usiminas, said two sources familiar with the negotiations.

Nippon Steel, Japan’s largest steelmaker, may exercise its right of first refusal and buy out its partners in the group that controls Usiminas to thwart the takeover offer from Cia. Siderurgica Nacional SA, or CSN, said the sources, who asked not to be named because the talks are private.

Nippon Steel would then resell to Gerdau part of the 26 percent stake in Usiminas held by partners Camargo Correa SA and Grupo Votorantim, they said.

CSN, Brazil’s third-largest steelmaker, has been buying Usiminas shares in the market since at least January, when the company said it may boost holdings to a level that could alter management or the control structure.

A move by Nippon Steel to block CSN and gain control of Usiminas would help the Japanese steelmaker pursue its global expansion, analyst Kazuhiro Harada said.

“Brazil is one of a few very important bases for Nippon Steel as it seeks to expand globally,” said Harada, a senior analyst at SMBC Nikko Securities Inc. Usiminas “is best positioned to target the U.S., Latin America and Europe and Africa.”

CSN Chief Executive Officer Benjamin Steinbruch has been in talks with Camargo Correa and Votorantim and offered to buy their voting stock for 40 reals each, valuing the 26 percent stake at 5 billion reais ($2.9 billion), said the same sources.

Gerdau is more likely to earn the backing of the government to lead a consolidation in the steel industry to compete in the global market, the sources said. Brazil’s government is seeking to boost supplies of the metal used in construction for infrastructure projects ahead of the 2014 World Cup and 2016 Olympic Games.

Nippon Steel aims to derail that offer following a disagreement with CSN over how to manage their Namisa iron-ore unit in Brazil, said the sources. Nippon Steel, as part of a group that included Posco and Itochu Corp., agreed in 2008 to buy 40 percent of Namisa from CSN for $3.12 billion. Nippon Steel sold its stake in June.

CSN, which is based in Sao Paulo, disclosed Aug. 19 that it raised its stake in Usiminas to 15.15 percent of preferred shares and 11.29 percent of common stock. Nippon Steel, Camargo Correa, Votorantim and Mitsubishi Corp. control Usiminas with 53.8 percent of the ordinary shares.

Hiroshi Nakashima, a spokesman for Nippon Steel, declined to comment. Gerdau, based in Porto Alegre, Brazil, said in an emailed statement Tuesday it is not involved in negotiations to buy Usiminas. CSN and Usiminas officials declined to comment.

Nippon Steel is also considering making an offer for the 10.1 percent voting stake held by the pension fund for Usiminas employees.

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