While discussions about selling Thyssenkrupp Steel Europe (TKSE) are still in progress and could potentially lead to an agreement, the likelihood of a deal appears to have diminished after nearly six months of diligence and conversations, the sources stated.
The companies might decide to officially halt negotiations as soon as next month, one of the sources indicated.
Thyssenkrupp has attempted to sell TKSE multiple times over the last few decades, exploring various options including listings, spinoffs, joint ventures, and full sales of this cyclical, high-cost business.
Not successfully selling TKSE would represent a setback for Thyssenkrupp CEO Miguel Lopez’s strategy to transform the renowned German engineering firm into a holding company by divesting shares in all of its business units, from automotive components to clean technology.
Several factors complicate the discussions, including 2.4 billion euros ($2.8 billion) in pension liabilities associated with TKSE, which have posed challenges in previous sale attempts, as well as differing views on the necessary future investments, the sources noted.
Additionally, Jindal Steel International has expressed growing concerns over escalating energy costs in Europe, according to another source. Energy prices in Europe were already higher than those in the United States and Asia, and they have surged further due to the Iran conflict.
Thyssenkrupp stated on Wednesday that confidential discussions with Jindal Steel International and labor representatives were ongoing, emphasizing that valuation, obligations, and future investments must be mutually agreed upon.
Jindal Steel International, part of the Naveen Jindal Group’s global steel operations, did not provide an immediate comment.
Earlier this month, Lopez mentioned that the group would proceed with the restructuring of TKSE “with or without Jindal,” while Thyssenkrupp’s deputy supervisory board chairman, Juergen Kerner, stated last week that talks had reached an impasse.
Lopez also noted that proposed EU measures aimed at supporting the bloc’s struggling steel sector have improved investor sentiment and reinforced Thyssenkrupp’s position in negotiations.
In September, Jindal Steel International presented an indicative offer for TKSE that includes establishing a green steel production facility in Duisburg and a commitment exceeding 2 billion euros ($2.31 billion) to create additional electric arc furnace capacity.
