Thyssenkrupp in talks with peers over steel business: source

Reuters

Published May 17, 2020 04:02PM ET

Updated May 18, 2020 04:25AM ET

By Christoph Steitz, Tom Käckenhoff and Arno Schuetze

FRANKFURT/DUESSELDORF (Reuters) - German ailing conglomerate Thyssenkrupp (DE:TKAG) is in talks with international peers about consolidating its loss-making steel business, a person familiar with the matter said.

The talks, to be unveiled as part of a strategy revamp later on Monday, follow a 372 million euro ($402 million) loss that Thyssenkrupp Steel Europe, Germany's largest steelmaker, posted in the first half of the group's fiscal year.

The update is expected to accelerate Thyssenkrupp's dismantling, a process that started last year when the group essentially put most of its divisions, including car parts, warships and plant building on the block.

Shares in Thyssenkrupp, which have lost nearly two-thirds of their value over the past 12 months after a raft of profit warnings and dwindling investor confidence, were 5.6% higher at 0806 GMT.

Ever since a strategy u-turn a year ago, which saw Thyssenkrupp dropping plans for a joint venture with India's Tata Steel (NS:TISC) in favour of a sale of its prized elevator unit, the group continued to champion the merits of steel consolidation.

Sources told Reuters that contact between Thyssenkrupp and Tata Steel never broke off and that both were still in talks about consolidation.

Business paper Handelsblatt said that Thyssenkrupp was also in discussions with Sweden's SSAB (ST:SSABa) and China's Baoshan Iron & Steel (Baosteel) (SS:600019) and that both were interested in a majority of the German firm's steel unit.

Thyssenkrupp and Baosteel declined to comment as did SSAB, whose shares were also 5.6% higher. Tata Steel Europe had no immediate comment.

Thyssenkrupp's supervisory board, in a meeting scheduled for Monday, is also expected to discuss the auction of Plant Technology, the division building chemical, fertiliser and other industrial plants.

Indicative bids were submitted last month but those were based on a business plan before the coronavirus pandemic kicked in, having effectively put the process on hold, a second source said.

"This will only go ahead if the coronavirus impact is clear and bidders will be able to recalculate their asking prices," the source said, adding Denmark's FLSmidth (CO:FLS), Italy's Maire Tecnimont (MI:MTCM) and U.S.-based Fluor (N:FLR) were in the race.