BERLIN/FRANKFURT (Reuters) – Thyssenkrupp will sell a 20% stake in its steelmaking business to energy holding EP Corporate Group (EPCG), controlled by Czech businessman Daniel Kretinsky, a major development for the conglomerate German which has been trying for years to sell this division.
Thyssenkrupp Steel Europe, with its origins dating back more than 200 years, is Germany’s largest steel producer and an industrial flagship of Europe’s largest economy.
But low-cost competition from Asian players, rising electricity prices and the slowdown in the global economy have put the German steelmaker in difficulty, which has suffered operational losses in four of the last five years.
The agreement with Daniel Kretinsky centers on the idea that steel production will require cheap, green electricity in the future, areas where EPCG can contribute with its 22 gigawatts of installed capacity across Europe.
The two sides are in negotiations for Daniel Kretinsky to purchase an additional 30% stake, with a view to a 50/50 joint venture, Thyssenkrupp said on Friday.
On the Frankfurt Stock Exchange, Thyssenkrupp shares soared 9% to 4.86 euros at 10:30 GMT.
No amount for the transaction was disclosed. According to brokerage Baader, Thyssenkrupp could receive 350 million to 400 million euros for this stake, unless additional write-downs are announced for the business in the short term.
“Our goal is a future-oriented concept that leads to the economic independence and commercial success of Thyssenkrupp Steel,” Miguel Lopez, Thyssenkrupp CEO, said in a statement.
In a press release, Daniel Kretinsky for his part described the agreement as an important contribution to the decarbonization of the steel industry, adding that “the entire European steel sector will undergo a transformation similar to that of the energy sector “.
Thyssenkrupp has set a goal of transitioning its steel business, which employs around 27,000 people, to climate-neutral production by 2045, with the help of government subsidies.
The German industrial conglomerate recently announced job cuts and reduced capacity at its main Duisburg site, which posed a sticking point in negotiations with Daniel Kretinsky and sparked criticism from the German government .
A spokesperson for the German government said on Friday that the agreement between Thyssenkrupp and Daniel Kretinsky did not call into question the subsidies granted to the group.
(Reporting by Christoph Steitz, Andrey Sychev, Matthias Inverardi and Tom Kaeckenhoff; Lina Golovnya, edited by Blandine Hénault)
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