Thyssenkrupp Gets Offer From India’s Jindal for Steel Unit
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Thyssenkrupp AG has received a takeover offer for its steel unit from India’s Jindal, opening a new chapter in the drawn-out search for a new owner of the struggling business.
The manufacturer said Sept. 16 it will carefully assess Jindal’s non-binding, indicative offer, without disclosing its size. Thyssenkrupp added it’s weighing the division’s long-term viability, the green transition and the future of jobs at its sites. Suitors have in the past made so-called negative bids to reflect the unit’s heavy investment needs and substantial pension obligations.
Thyssenkrupp Materials NA ranks No. 97 on the Transport Topics Top 100 list of the largest private carriers in North America, and No. 5 among manufacturing carriers.
Thyssenkrupp shares rose as much as 7.9% in Frankfurt. The stock has roughly tripled this year, valuing the company at around 7.3 billion euros ($8.6 billion), as investors anticipate it will cash in on a defense boom in Europe.
A Thyssenkrupp steel plant in Germany. (Alex Kraus/Bloomberg News)
Once a symbol of German industrial might with interests spanning steel, elevators and plant engineering, Thyssenkrupp has spent years dismantling its conglomerate structure. The steel division, which employs around 26,000 people, has been weighed down by soaring energy bills, rising interest rates and chronically low steel prices. Losses and writedowns have drained cash and deterred potential buyers.
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The latest suitor is part of Jindal Group, one of India’s largest industrial conglomerates with interests spanning steel, power and infrastructure. The company has been expanding abroad, positioning itself to meet rising demand and compete globally.
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Jindal said it can bring the money and technology needed to make Thyssenkrupp’s steel cleaner. The Indian group has promised to finish a new plant in Duisburg, Germany, that uses hydrogen instead of coal to make iron, and to add more modern electric furnaces in Europe’s biggest economy. With these upgrades, Thyssenkrupp could become Europe’s biggest producer of low-emission steel, according to Jindal.
Before the 2008 financial crisis, Thyssenkrupp was a dominant global player across multiple industries, including steel production, industrial engineering and elevators. Managers are effectively winding the conglomerate down to a smaller set of businesses that can better withstand volatile markets.
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The company’s steel unit swung to an earnings before interest and tax loss in the quarter that ended June 30, with sales declining 13% to around 2.45 billion euros. Producers in the region have been grappling with muted demand from the automotive industry.
Labor representatives welcomed Jindal’s interest, with the IG Metall union’s Vice Chair Jürgen Kerner saying it was “fundamentally good news” for employees given the Indian group’s access to raw materials and expertise in green steelmaking.
Czech billionaire Daniel Kretinsky, a longtime suitor of the steel business, has also been in talks over a potential deal. His investment vehicle, EP Corporate Group, last year acquired a 20% stake in the unit.
