ThyssenKrupp ends talks with Liberty Steel over potential steel unit takeover

by on

eyewave/Adobe Stock

ThyssenKrupp has ended discussions with London-based Liberty Steel over the potential sale of the German conglomerate’s steel unit.

The parent company made the announcement Wednesday evening, Feb. 17.

“We opened the door for negotiations, but in the end our ideas about the corporate value and the structure of the transaction were far apart,” ThyssenKrupp Chief Financial Officer Dr. Klaus Keysberg said.

Keysberg added ThyssenKrupp regrets the decision because it perceived Liberty Steel “as a serious partner in the process.”

“There was a close exchange between ThyssenKrupp and Liberty Steel on a number of complex topics. As a result, however, no common solution could be found for key requirements addressed by ThyssenKrupp,” the group also stated.

Cut-to-length adders. Width and gauge adders. Coatings. Feel confident in knowing what you should be paying for metal with MetalMiner should-cost models.

ThyssenKrupp, Liberty talks end

ThyssenKrupp had sought approximately €1.5 billion ($1.8 billion) for its steel assets. Liberty, however, wanted either to acquire it for nothing or receive extra payment with it, one industry watcher in Germany said.

Liberty Steel officials were also unavailable for comment. A ThyssenKrupp spokeswoman declined to comment beyond the group’s original statement.

In February, ThyssenKrupp requested clarity on an updated bid it received in January from Liberty. The bid followed a non-binding offer in late 2020, reports stated.

Liberty’s offer may not be completely infeasible, as Europe’s demand outlook for rolled steel in 2021 is not likely to reach 2019 levels, the industry watcher noted.

The source described ThyssenKrupp’s plant at Duisburg in western Germany as a good asset. Yet, he warned that much is also contingent on moves by China.

“The current increase in prices is fueled mostly by costs,” the source said. “The demand for raw materials in China increased prices for metals. It all depends on the Chinese policy and investments.”

ThyssenKrupp recorded an adjusted EBIT loss of €960 million ($1.16 billion) for its 2019-2020 fiscal year ending Sept. 30. The loss compared with a €31 million ($37.5 million) gain in the previous year.

EUROFER releases 2021 outlook

In its 2021 outlook, the European Steel Association (EUROFER) forecast apparent steel consumption would reach 152 million metric tons.

While that forecast represents a 15% increase from a projected 134 million metric tons for 2020. However, it falls short of the 154 million metric tons consumed in 2019.

Duisburg capability

Duisburg can pour 13 million metric tons per year of crude steel. That steel goes into four blast furnaces and two basic oxygen furnaces. The plant casts slab for rolling into hot and cold rolled
coil, as well as plate.

Other products at the plant include non-oriented and grain-oriented electrical steels, along with downstream coated products.

Liberty Steel is an integrated steelmaker with steelmaking and rolling assets in Europe – Romania, North Macedonia, Poland, Czech Republic, France and the United Kingdom. Liberty also has assets in the United States and Australia.

The firm’s total crude steel capacity is approximately 20 million metric tons per year.

Finished products from the group include merchant bar, rebar, wire rod, rails and sections, along with plate, hot and cold rolled coil. The group also produces coated products, such as hot dipped galvanized coil, prepainted sheet and aluminized sheet.

ThyssenKrupp’s future

ThyssenKrupp will continue focusing on developing its steel 20-30 strategy.

The steelmaker originally adopted the plan in March. The strategy stipulates a reduction in head count of 3,000 until 2026 and additional investments of €800 million ($967 million).

The strategy also calls for efforts to produce climate-neutral steel products. As such, the strategy aims to yield a 30% reduction in carbon dioxide emissions by 2030.

Prospective partnerships and consolidations are also possible. The group is also speaking with the German federal government about support, ThyssenKrupp said in its 2019-2020 annual report.

Volatility is the name of the game. Do you have a steel buying strategy that can handle the ups and downs?

Leave a Comment

Your email address will not be published. Required fields are marked *