Thyssenkrupp Jumps as Gupta’s Liberty Said to Bid for Steel Unit
Gupta’s Liberty Said to Plan Offer for Thyssenkrupp Steel Unit
(Bloomberg) -- Thyssenkrupp AG shares surged as the German conglomerate is expected to receive an offer for its historic steel business as part of restructuring efforts aimed at ensuring the group’s survival.
Sanjeev Gupta’s Liberty Steel is likely to make an offer Friday for Thyssenkrupp’s steel unit, according to people familiar with the matter. Thyssenkrupp will also continue talks with other potential suitors for parts of the business, said the people, who asked not to be identified because the information is private.
Thyssenkrupp is seeking buyers or partners for its steel unit as it races to streamline its business and ensure its survival. The company agreed earlier this year to to sell its prized elevator division to buy time for the broader restructuring, but ongoing losses are eating into the cash pile.
A full sale would mark the end of an era for Thyssenkrupp. The once-mighty German industrial group has built its business around steel since the 19th Century, but the unit has become a cash drain due to low prices. The company tried to partner with Tata Europe but the joint venture was blocked in 2019 by the European Commission.
The company has also held initial talks with Sweden’s SSAB as well as domestic rival Salzgitter AG over a potential combination with its steel unit.
Thyssenkrupp shares rose as much as 25% and traded 18% higher at 10:14 a.m. in Frankfurt.
Liberty Steel is a unit of GFG Alliance, a loose structure of companies owned by members of commodity trader-turned-serial dealmaker Gupta’s family. The company has drawn the spotlight for its incredible rate of expansion in the past five years, acquiring assets around the world from the likes of ArcelorMittal and Tata Steel. GFG has also faced scrutiny for the opaque structure of its business and heavy reliance on financing from Lex Greensill’s eponymous firm.
Liberty has indicated it will offer to shift production capacity from its Eastern European steel plants to Germany, specifically Thyssenkrupp’s Duisburg facility, to win over the German firm’s labor representatives, some of the people said.
Such a move might help Duisburg, which has an annual capacity of 11 million tons a year of steel, become profitable.
Still, there’s no certainty that a deal will be reached. Spokesmen for both Thyssenkrupp and Liberty declined to comment.
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