Thyssenkrupp Gets Offer From India’s Jindal for Steel Unit

A Thyssenkrupp Steel Europe steel plant in Duisburg, Germany. Photo by Alex Kraus /Bloomberg

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(Bloomberg) — Thyssenkrupp AG has received a takeover offer for its steel division from India’s Jindal, opening a new chapter in the drawn-out search for a new owner of the struggling business.

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The German conglomerate said Tuesday its management board will carefully assess the non-binding, indicative offer, weighing the division’s long-term viability, the continuation of its green transition and the future of jobs at its steel sites.

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Thyssenkrupp didn’t disclose the size of the offer. In past approaches, suitors have occasionally made so-called negative bids to reflect the unit’s heavy investment needs and substantial pension obligations.

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Thyssenkrupp shares rose as much as 7.9% in Frankfurt. The stock has roughly tripled this year, valuing the company at around €7.3 billion ($8.6 billion), as investors anticipate it will cash in on a defense boom in Europe. 

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Once a symbol of German industrial might with interests spanning steel, elevators and plant engineering, Thyssenkrupp has spent years dismantling its conglomerate structure. The steel division has repeatedly failed to break even, weighed down by soaring energy bills, rising interest rates and chronically low steel prices. Losses and writedowns have drained cash and deterred potential buyers.

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Before the 2008 financial crisis, Thyssenkrupp was a dominant global player across multiple industries, including steel production, industrial engineering and elevators. Managers are effectively winding the conglomerate down to a smaller set of businesses that can better withstand volatile markets.

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The potential buyer is part of Jindal Group, one of India’s largest industrial conglomerates with interests spanning steel, power and infrastructure. The company has been expanding abroad, positioning itself to meet rising domestic demand and compete globally.

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Jindal said it can bring the money and technology needed to make Thyssenkrupp’s steel cleaner. The Indian group has promised to finish a new plant in Duisburg that uses hydrogen instead of coal to make iron, and to add more modern electric furnaces in Germany. With these upgrades, Thyssenkrupp could become Europe’s biggest producer of low-emission steel, according to Jindal.

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Labor representatives welcomed the approach, with IG Metall Vice Chair Jürgen Kerner saying Jindal’s interest was “fundamentally good news” for employees given the Indian group’s access to raw materials and expertise in green steelmaking. 

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Czech billionaire Daniel Kretinsky, a longtime suitor of the steel business, has also been in talks over a potential deal. His investment vehicle, EP Corporate Group, last year acquired a 20% stake in the unit.

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(Updates with shares in fourth paragraph.)

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