German steel giant ThyssenKrupp AG (TKA.DE,TYEKF.PK) Monday confirmed that it is in talks with Finnish rival Outokumpu Oyj (OUTA.F, OUTKY.PK) regarding the merger of its stainless steel unit Inoxum.
ThyssenKrupp noted that all options, including an initial public offering, a spin off or a sale to another investor, remains open for Inoxum. Last week, the company announced that the divestment of Inoxum, formerly Stainless Global, is proceeding according to plan and expects to complete the disposal of the unit by the end of 2012.
Outokumpu, in a release, confirmed preliminary discussions with ThyssenKrupp to evaluate potential strategic options, including a potential business combination of Outokumpu and Inoxum.
Reports said, citing persons close to both companies, that ThyssenKrupp would retain a minority stake after the merger.
In May 2011, ThyssenKrupp announced its decision to separate its stainless-steel operations from the main company within 12 to 18 months. The company planned to divest more units as part of a move to maintain stronger focus within the automotive business activities. The divestments envisaged by the Executive Board of the company were about 10 billion euros and 35,000 employees.
The independence of Inoxum is seen as a considerable building block in the overall concept for strategic development at the ThyssenKrupp group to drive competitiveness and sustainability.
Last week, ThyssenKrupp said it continues to expect first-quarter adjusted EBIT to be significantly lower than last year. Based on positive earnings contributions from its Technologies businesses, the company plans to focus on the division even more strongly than in the past.
According to the company, its Materials and Technologies divisions showed a mixed result in the first quarter, while Steel Europe and Material Services reported declining volumes and earnings compared to the prior year. Steel Americas continued to make losses.
ThyssenKrupp has already completed the sale of its Metal Forming group and Xervon group.
In Frankfurt's Xetra, ThyssenKrupp shares are currently trading at 21.42 euros, up 3.28 percent, on a volume of 1.13 million shares.
TYEKF.PK ended on Friday at $27.25.
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