German steel giant ThyssenKrupp AG (TYEKF) is planning to expand its operations in Brazil and completely exit its American steel operations, according to media reports on Sunday.
The current move comes after more than a year of unsuccessful attempts to sell ThyssenKrupp's loss-making Steel Americas business, comprising a steel slab plant in Brazil and a processing mill in Alabama. ThyssenKrupp is Germany's largest steelmaker by output.
The new plan is to completely sell its unprofitable American steel operations and maintain its 73 percent stake in the steel plant in Brazil, while building a steel processing plant there by teaming up with a partner. Brazilian mining company Vale SA (VALE) holds the remaining 27 percent stake.
ThyssenKrupp has already recorded losses of more than $15.7 billion on the plants. ThyssenKrupp reportedly acquired the two plants in Alabama and Brazil with a total investment of $11.8 billion in order to crack the American market. It put the plants on the block in the first half of last year.
In early 2013, steel giant ArcelorMittal SA (MT) reportedly emerged as one of the leading contenders among those who floated offers to acquire ThyssenKrupp's steel operations in the Americas. ArcelorMittal and U.S. steelmaker Nucor Corp. (NUE) had reportedly submitted similar bids of $1.5 billion for ThyssenKrupp's plant in Alabama.
ArcelorMittal continues to be the serious bidder for the Alabama plant. It has teamed up with Japan's Nippon Steel & Sumitomo Metal Corp. to bid about $2 billion for the Alabama plant.
Meanwhile, Brazil's Companhia Siderurgica Nacional had submitted a $3.8 billion bid for the Alabama plant and also a majority stake in ThyssenKrupp's Brazilian plant. However, months of negotiations have failed to reach a deal.
ArcelorMittal, the world's largest steelmaker by volume, is said to have termed the Alabama pant as a 'world-class asset in terms of quality and capability.' The company has always hunted for the acquisition of beleaguered steel makers to built its empire. It already holds a 37 percent market share in the North American Free Trade Area.
There were also reports in early July that ThyssenKrupp was exploring the possibility of selling part of or a minority stake in its European steel business. In early 2013, the company went ahead with the restructuring of the operations amid a "worsening steel climate in Europe".
In August, ThyssenKrupp reported third-quarter loss of 383 million euros, compared to profit of 87 million euros in the comparable quarter last year. Quarterly revenues also declined to 9.50 billion euros from 10.36 billion euros last year. Looking ahead, the company said it expects a decline in full-year sales, with fourth-quarter sales exceeding the third quarter.
TYEKF last traded on Thursday at $26.80.
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by RTT Staff Writer
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