Metal tycoon Gupta targets Thyssenkrupp in steelmaking campaign

FRANKFURT / DUESSELDORF (Reuters) – Liberty Steel, founded by commodities tycoon Sanjeev Gupta, said on Friday it had made a non-binding offer for Thyssenkrupp. TKAG.DE steel industry, hoping to forge a European champion to master the transformation towards carbon neutral production.

German steel workers Thyssenkrupp wave banners as they protest for the retention of their jobs in Düsseldorf, Germany, October 16, 2020. REUTERS / Wolfgang Rattay

Deal would combine continent’s fourth and second-largest steelmakers after planned joint venture between Thyssenkrupp and Tata Steel TISC.NS was blocked in 2019.

“I really believe in the future of European steel,” Gupta told reporters on a call. “By investing in green steel, I believe the industry can transform and prosper over the long term. “

He said steel as a business needs time, adding that this was one of the reasons it was in private hands.

Gupta was hesitant to quantify the expected synergies, but said his group has spent more than 5 billion euros ($ 5.9 billion) in the past five years to acquire and invest in companies.

Thyssenkrupp shares jumped 23% and the Essen-based company said it will carefully consider the offer, details of which have not been disclosed, even as it continues discussions with other potential partners. .

The estimated enterprise value of the Thyssenkrupp steel unit is between 1.2 and 4.5 billion euros.

Liberty said he was open to stepping up talks to explore the possibility of making a firm offer for the unit, with Gupta saying he would seek broad support from stakeholders, including unions who had so far been skeptics.

A sale of the steel business would mark a radical change in the composition and structure of Thyssenkrupp, following the divestiture of its elevator business earlier this year.

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Formed by Gupta last year, Liberty Steel is a private unit of British conglomerate GFG and includes all of its family’s steel activities. He has embarked on a wave of European purchases, most recently in France, where he acquired the Hayange company which was previously owned by British Steel.

Gupta said Liberty Steel’s strong position in construction in Eastern Europe was fairly well complemented by Thyssenkrupp’s strong position in the automotive sector, its largest customer.

In Europe, Liberty has 13 million tonnes of annual capacity, or 72% of its total, and employs 17,000, compared to around 27,000 steelworkers at Thyssenkrupp. Unlike Thyssenkrupp, it has no production in Germany.

A person familiar with the matter said Liberty was advised by a consortium of banks led by Credit Suisse CSGN.S.

His interest comes amid planned protests by steel workers to put more pressure on the government to bail out the Thyssenkrupp steel unit, which recorded an operating loss of 700 million euros ($ 819 million) over nine months.

One trader said the offer had “great potential after a disastrous stock performance reflecting corporate chaos.”

Thyssenkrupp CEO Martina Merz said this week the company will consider all options for the unit, including selling a stake to the German government.

Economy Minister Peter Altmaier has so far opposed the idea, preferring instead support payments to help the industry switch to hydrogen-based steel production.

Thyssenkrupp also explores connections with the German Salzgitter SZGG.DE, Swedish SSAB SSABa.ST and Tata again, sources told Reuters.

Additional reporting by Emma Thomasson; Editing by Pravin Char, Toby Chopra, Kirsten Donovan and Emelia Sithole-Matarise

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