Thyssenkrupp Ends Steel Sale Talks With Liberty Over Value

(Bloomberg) -- Thyssenkrupp AG ended talks with Liberty Steel Group about potentially selling its steel division and will try to make the business sustainable on its own.

“In the end our ideas about the corporate value and the structure of the transaction were far apart,” Thyssenkrupp Chief Financial Officer Klaus Keysberg said in a statement. Bloomberg News reported earlier this month that Liberty’s offer for the German conglomerate’s steel unit gave it a negative equity value of at least 1.5 billion euros ($1.8 billion), citing people familiar with the matter.

Liberty described the talks as “suspended” and said in an emailed statement it is keeping the door open. The company tied to Sanjeev Gupta, the British-Indian commodity trader turned industrial tycoon, believes its offer is “the only long-term sustainable plan” for the German firm’s steel business.

Thyssenkrupp whipsawed in early Frankfurt trading, falling more than 6% after the open and then recovering quickly. The shares rose 0.6% as of 9:26 a.m. local time.

“Short-term this might disappoint some investors, thinking that the transformation is losing steam,” said Christian Obst, an analyst at Baader Bank AG. Holding on to the unit makes sense for now, he said.

Rising Prices

While the steel business has dragged on Thyssenkrupp for years, it’s been getting a boost from rising metal prices and the Essen-based company has said it’s in no rush to divest. The firm expects rising sales to limit its annual cash burn to around 1 billion euros, an improvement from a 5.5 billion-euro drain in the previous financial year.

Bloomberg News reported last month that Thyssenkrupp was considering spinning off and listing the steel division amid mounting opposition from union officials and some large shareholders to a potential sale to Liberty. Key Thyssenkrupp stakeholders had questioned whether Liberty has adequate funding and a viable strategic plan for the steel business.

Liberty Steel is part of GFG Alliance Ltd., a loose structure of companies owned by Gupta’s family members.

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