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Czech billionaire Daniel Křetínský is selling his stake in Thyssenkrupp’s steel operation to allow the German industrial conglomerate to pursue talks with Indian magnate Naveen Jindal, who last month launched a bid for the business.
Křetínský’s EP Group and Thyssenkrupp said in a statement on Thursday that they had agreed to end talks over a joint venture that would have raised the Czech investor’s share of the steel unit from 20 to 50 per cent.
Křetínský’s company said it respected Thyssenkrupp’s “wish to focus on discussions with Jindal Steel”, whose offer included a promise to invest more than €2bn in the steel business.
Thyssenkrupp sold the steel unit stake to Křetínský last year, as the conglomerate looked to spin off divisions and transition to being a holding company, but talks to split the business failed to progress.
EP Group indicated it had agreed to sell the steel stake and that it would receive a “refund of the purchase price” from Thyssenkrupp. Neither side disclosed financial details of the deal.
Thyssenkrupp’s steel operation has struggled with waning demand in key markets, higher energy costs in Europe and cheaper imports from Asia. The unit’s pension liabilities, which analysts put at about €2.7bn, is another issue that possible buyers will have to contend with.
The challenges led the Essen-based conglomerate to write down the value of the steel unit by a total of more than €3bn over the past two years and launch a major restructuring effort. The turnaround plan for the business would see significant reductions in capacity at its steel facilities and the loss of 11,000 jobs.
The problems have come as Thyssenkrupp also looks to decarbonise its steel production, a process that requires significant investments. The German government has pledged €2bn to install a direct reduction furnace at Thyssenkrupp’s main site in Duisburg.
Executives at the company have warned that the high cost of hydrogen made from renewable energy and the slow development of infrastructure threatened to impeded efforts to produce low-carbon steel.
Křetínský’s exit leaves the door open to Jindal, whose representatives made a pledge to push forward emissions reduction plans and invest in the construction of an electric arc furnace with an investment in excess of €2bn.
The Indian billionaire, who hails from one of the country’s leading industrial families, last year acquired Vítkovice Steel in the Czech Republic, giving it a foothold in the sector in Europe.
