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May 18, 2005 ALFA to sell its stake in Hylsamex - Accepts offer from Grupo Techint Monterrey, N.L., México. May 18, 2005.- ALFA, S.A. de C.V. (ALFA) announced today that it has accepted an offer from Grupo Techint (Techint) - the international group with global operations in the energy and steel industries - to purchase ALFA's 42.5% stake in Hylsamex, S.A. de C.V. (Hylsamex). Pursuant to the agreement with Techint, the offer will be extended to all of Hylsamex's series B and L shareholders and will be conditioned on acceptance by the holders of a majority of all Hylsamex outstanding shares and a majority of the outstanding series B shares. The Board of Directors of Hylsamex approved the Techint offer. The amount of the offer for 100% of the shares totals US$ 2,253 million, which is equivalent to approximately US$ 3.71 per share. The transaction is structured as a public tender offer for Hylsamex shares in an amount equal to US$ 2,110 million, or US$3.47 per share. In conjunction with the tender offer, Hylsamex will pay an extraordinary dividend to all shareholders in the amount of US$ 143 million. Although the tender offer will be made in US dollars, Hylsamex shareholders may elect to receive the payment in pesos at the exchange rate prevailing at the date of the closing of the transaction. For illustrative purposes, using the average exchange rate between the Mexican peso and the US dollar from January to May 2005, the aggregate value (including the US$ 143 million dividend) would be $41.40 pesos per share. “The decision to sell our Hylsamex shares is consistent with the strategy we have been following since mid2000, when we decided to reduce our exposure to the steel industry,” commented Mr. Dionisio Garza Medina, ALFA's Chairman of the Board and Chief Executive Officer. “The first step in that direction was made in February of last year, when we distributed a 39% ownership in Hylsamex to our shareholders,” he added. For three years, Hylsamex faced tough business conditions derived from the worst crisis in the global steel industry in the past fifty years. In 2002, ALFA's Board of Directors made the decision to financially support Hylsamex in its restructuring, as the company had been modernized and there was a belief that both demand and steel prices would eventually recover, which materialized during 2004. “It is fair to highlight the outstanding efforts made by Hylsamex's personnel during the difficult years as this was instrumental for the recovery of the company,” remarked Mr. Garza Medina. Mr. Garza Medina explained that several leading steel companies presented very competitive proposals regarding the sale of Hylsamex. After thoroughly analyzing such proposals, ALFA's Board of Directors chose the Techint offer. Mr. Garza Medina commented: “It was the best from an economic point of view. It offered the highest overall price for the shares and was the one that permitted us to maximize value for both ALFA and Hylsamex shareholders. We are selling the shares at a favorable point in the steel cycle and are creating value for all shareholders and generating an outstanding return on the investment in Hylsamex that we made in 2002.” “Furthermore, Techint is a global company, highly competent and committed to the steel industry and their employees. It has an established presence in Mexico since 1952. We believe Hylsamex will become part of a very solid group, which would allow it to continue to play a key role in the Mexican steel industry, assuring its viability and employment opportunities for its personnel in the long run in an increasingly global industry,” Mr. Garza Medina explained. The Board of Directors of ALFA decided to apply the proceeds from the sale of Hylsamex's shares to reduce debt, in order to achieve a capital structure that provides greater flexibility to pursue attractive investment opportunities as well as to consider dividends to shareholders or a future share repurchase program. "The sale of the Hylsamex shares is an important step for ALFA because it gives us the opportunity to create a stronger company, that is well positioned to continue to support Mexico 's economic development and the May 18, 2005 generation of job opportunities for our people, as well as to create value for our shareholders,” explained Mr. Garza Medina. In turn, Mr. Paolo Rocca, President of Techint, commented: “The acquisition of Hylsamex strengthens our goal to build a leading regional group in Latin America capable of successfully competing in the global steel industry, which is currently undergoing a strong consolidation process.” In a separate agreement, Techint agreed to buy ALFA's stake in Consorcio Siderurgia Amazonia, Ltd., the holding company of Sidor, for approximately US$ 107 million. Further public announcements will be made in the near future in connection with the tender offer, at the appropriate time and as required by Mexican securities laws. The transaction is subject to certain customary closing conditions, including among other things, the receipt of the necessary governmental approvals. The transaction is expected to close within the next 90 days. Morgan Stanley served as financial advisor to both ALFA and Hylsamex in this transaction and Weil, Gotshal and Manges, LLP served as legal counsel. ALFA is a Mexican company consisting of five business groups: Alpek, dedicated to petrochemicals and synthetic fibers; Sigma, dedicated to refrigerated foods; Nemak, involved in aluminum cylinder heads; Onexa, with interest in the telecommunications industry in Mexico and Hylsamex, dedicated to steel. ALFA is the world's largest producer of aluminum cylinder heads and the world's second largest producer of PTA. The company is the leading producer and distributor of refrigerated food and one of the significant producers of coated steel in Mexico. ALFA has production facilities in Mexico, the United States, Canada, Germany, Slovakia, the Czech Republic, the Dominican Republic, Costa Rica and El Salvador. Its products are marketed in more than 45 countries. In 2004, ALFA reported sales of US$ 5,069 million and employed more than 42,000 people. The Techint Group is an international group of companies with global operations focused principally on steel and energy with annual revenues of around US$11 billion and 50,000 employees. Through its majority shareholding in Tenaris, Techint controls the leading global manufacturer of seamless steel pipes for the world's energy industry and the leading regional producer of welded pipes for oil and gas pipelines in South America. Through shareholdings in Siderar and Sidor, it controls the leading manufacturers of flat steel products in Argentina and Venezuela - both major exporters -. In 2004, Techint consolidated production of 8.8 million tons of flat, long and tubular steel products. Techint's engineering and construction business, operating principally in Mexico, Central and South America, Europe and the Middle East, specializes in the design and implementation of steel and energy facilities. Techint has had a substantial presence in Mexico since 1952 through Tubos de Acero de México S.A. (Tamsa), the seamless pipe manufacturing company that is part of Tenaris, and Techint S.A. de C.V., an engineering and construction company specializing in power distribution lines and energy, petrochemical and industrial plants. This press release does not constitute an offer to purchase securities. Any tender offer will be made through an official offer to purchase and related transmittal documents, which will be furnished by Techint to Hylsamex shareholders. Shareholders of Hylsamex should carefully read these documents when they become available because they will contain important information related to the tender offer. Certain statements contained in this press release may constitute "forward-looking statements" that are subject to various risks and uncertainties. Although ALFA believes they these statements are based on reasonable assumptions, there can be no assurance that future events will not affect their accuracy. Such events include global and local changes in policy, economics, trade, competition, market and regulatory considerations (including the ability to obtain all necessary governmental approvals for the subject transactions). The forward-looking statements contained in this news release speak only as of this date, and ALFA does not assume any obligation to update them. May 18, 2005 For further information: Enrique Flores Vice President, Corporate Communications ALFA, S.A.B. de C.V. | Phone + 52 (81) 8748-1207 | [email protected]