Global Industry: Vale to seek single class of stock in major governance move

Vale Headquarters
Brazil Vale headquarters

Vale (VALE +4.6%) opens at a 52-week high before easing back, after the miner yesterday unveiled a proposal to become a company with no defined controlling shareholders; the news sparked Brazil’s benchmark Bovespa stock index to rise yesterday to near six-year highs.

“We’re facing a historic moment for Vale, a landmark that could be as important as privatisation 20 years ago,” CEO Murilo Ferreira told analysts in a conference call.

The proposal seeks to unify Vale’s two existing classes of stock so that all of its shares carry voting rights, up from ~61% now; controlling shareholder Valepar, which currently holds 53.9% of Vale’s voting stock and is majority-owned by state-run entities, would lose its control of Vale.

Analysts say the proposal should improve transparency, reduce the potential for government interference, and make Vale easier to compare to its peers.

However the Brazilian government would keep a so-called golden share, a legal mechanism that allowed it to fend off hostile takeover attempts and shape strategic decisions, the wire service said.

Vale’s shares jumped more than 6% yesterday to BRL34.24 on the news.(source: Vale SA)

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