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Shares of Thyssenkrupp rose as much as 10 per cent after the German industrial conglomerate said Czech billionaire Daniel Křetínský would take a 20 per cent stake in its steel business.
The two parties are in talks about Křetínský’s EP Corporate Group taking a further 30 per cent stake, forming a joint venture, the group added on Friday.
Thyssenkrupp’s chief executive Miguel Lopez said the partnership would allow the steelmaker to invest more and “reduce the cost of decarbonisation” to “accelerate the green transformation of the steel industry”.
The German industrial giant, which was once the largest steel company in Germany, has been hit by the double punch of higher energy prices and lower demand for steel from carmakers. It is in the middle of a restructuring that involved selling off its lift business as well as its car parts and stainless steel operations. It said last month it was in advanced talks to sell a stake in its submarines division to US private equity group Carlyle.
Thyssenkrupp is also struggling to decarbonise its steel production as the cost of carbon credits that the industry needs to buy to offset emissions is set to rise further. The steel sector is responsible for about 7 per cent of global emissions.
Analysts at Citigroup said the move was “likely positive for the green steel transition”. They estimated that the equity value of Thyssenkrupp steel, excluding €3bn of pension commitments, was about €700mn.
“We believe that any cash coming in from the stake sale at the parent company level could be injected into the steel business. This should help ease the cash needs of the business, especially given the green steel capex needs,” they wrote in a note.
Křetínský has been one of Europe’s most prolific dealmakers over the past few years, criss-crossing France, Germany and the UK. The so-called “Czech Sphinx” owns 50 per cent of Germany’s Metro supermarket chain and is also in negotiations to buy International Distributions Services, the parent company of the UK’s Royal Mail.
Thyssenkrupp confirmed the deal would not have an impact on the talks to sell its submarine business to Carlyle and a German government-backed fund.
Lopez said the deal with Křetínský would “contribute to the continued presence of the steel industry in Germany” and would allow the company to avoid potential job cuts.
“The entire European steel sector will undergo a similar transformation to the energy sector. We pay great respect to Thyssenkrupp Steel as one of the traditional pillars of the German economy,” said Křetínský.
