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25. July 2012

GER - ThyssenKrupp plan B could be steel Europe sale

Reuters reported that if Germany's ThyssenKrupp fails to find a buyer for its steel assets in the Americas, it would consider the politically unpalatable option of throwing in its European steel operations too.

The report cited some banking sources as saying that selling off steel would leave the group focused on its technologies divisions, which make, among other things, industrial plants, elevators and submarines, businesses it hopes would be less exposed to economic swings.

One banker close to the company said that "Plan B is to seek a solution for the whole steel business. Management is already considering alternatives in case Steel Americas does not work out. They simply have to do that. The initial response from possible buyers is muted, and management cannot allow itself to be in a negotiating position in which a remaining buyer can blackmail them into a deal," the banker said.

ThyssenKrupp said in May 2012 that it was considering selling or finding a partner for Steel Americas to raise cash and cut debts racked up trying to gain a beachhead in North America, but interest has been lukewarm.

Two other bankers familiar with the steelmaker's strategy said a sale of Europe Steel would be possible next year, in the event of economic recovery, and added Thyssen could seek a German buyer in an effort to sidestep the political difficulties in selling a business that employs nearly 29,000 jobs.

The company denied a sale of steel Europe was on the cards when contacted by Reuters, but the bankers said it was being considered at high level.

One of the two bankers said that "CEO Mr Heinrich Hiesinger and finance director Mr Guido Kerkhoff are pushing for a sale of European steel. This is likely to come next year."

The other one said that "The sale of Steel Americas is just the first step. The second will be the sale of European steel business."

The company's steel operations are grappling with rising costs, shrinking margins and weak demand in North America and Europe, and its Americas strategy, producing slabs cheaply in Brazil and selling in the United States, fell foul of a strong Brazilian real, the debt crisis in Europe and a sluggish US economy.

Source - Reuters

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