German industrial heavyweight Thyssenkrupp AG reportedly advances with secret negotiations to sell its steel division, Thyssenkrupp Steel Europe, or TKSE, in a phase-in-phase transaction to India's Jindal Steel International, a deal likely to change the landscape of European steel.
Under the new talks, Jindal Steel would first take a larger stake of nearly 60% in TKSE, while the remaining 40% would be transferred later subject to achieving certain restructuring milestones. The two-step structure is targeted at stemming high operating cost and heavy pension liabilities of the unit. Long-time efforts to find a buyer for the historically problematic business have been complicated by those issues.
Jindal representatives are expected to visit TKSE's major facilities in Duisburg, Germany this month as part of due diligence in advance of formal agreements.
Thyssenkrupp's spokesperson said that "confidential talks are being held between the company and Jindal Steel & Power with workers' representatives," but underlined there was no signed final agreement. Key terms, including valuation, future investment commitments, and obligations regarding employment and environmental upgrades, are part of ongoing negotiations.
The proposed deal, if finalized, will be a major move for Jindal Steel’s strategic foray into Europe during a particularly challenging time for steel markets across the world owing to factors such as high energy pricing, challenges posed by competitive imports, and an industry-wide imperative for decarbonization.
For Thyssenkrupp, the divestment of TKSE would form a part of the company’s restructuring strategy to focus more on those business areas where the group earns more and shed those business areas which have been lagging in their profits over the years.
Industry observers point to the staged nature of the sales structure as potentially representing the way in which cross-border industrial transactions can be structured in the future in order to manage risk for the purchaser while providing for long-term stability to be achieved by the German steel company.
Sources:
Thyssenkrupp in talks to sell steel unit TKSE to Jindal Steel
Exclusive: Thyssenkrupp weighs phased sale of TKSE to Jindal Steel, sources say
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BASUNDE, Rohini（Global PR & Reporter ）
Based in India, Rohini works as a Reporter and Global PR professional,
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