Liberty Steel Group makes play for Thyssenkrupp Steel Europe

Liberty Steel Group, part of London-based GFG Alliance, has announced that it has made a nonbinding indicative offer (NBIO) as part of what it says is a Thyssenkrupp-led process to acquire that company’s steel business.

Thyssenkrupp AG’s shares rose Oct. 16 before Liberty made its official announcement based on rumors that were circulating in the market, according to an article from Bloomberg.  

In a news release from Liberty about the offer, the company says the combination of Liberty Steel and Thyssenkrupp Steel would create a strong group that is well-positioned to tackle the challenges faced by the European steel industry and accelerate the transformation to more environmentally friendly steel production.

Liberty Steel says a combination with Thyssenkrupp Steel Europe “can be the right answer from an economic, social and environmental perspective,” adding that the businesses are complementary with respect to assets, product lines, customers and geographic footprint.

The company says it is committed to the industry and jobs, reflecting its values of a family-owned company, adding that it “has proven to turn around businesses in a way that is loyal to local communities and saves jobs.”

Liberty also is seeking to be carbon neutral by 2030. “But to transform a whole industry, a European approach is required,” the company adds in the news release. “A joint entity would be well-positioned to create the sustainable Greensteel industry leader in Europe. We would thereby contribute to the long-term recovery of the sector and the EU’s green deal.”

Liberty’s Greensteel strategy “aims to recycle and upcycle the growing amount of scrap steel using electric arc furnaces powered by renewable energy,” according to the company’s website. The company also claims its Greensteel strategy “provides a more flexible and customer-focused solution while also reducing the carbon footprint of manufacture, shortening the supply chain, retaining and upgrading skills, stimulating new technologies and engendering a sustainable and globally competitive metal manufacturing sector.

Liberty says its current proposal is subject to certain assumptions about the business and is supported by a number of financial institutions. “Given the opportunity to proceed in the transaction process, Liberty Steel is open to intensify the dialogue with Thyssenkrupp and would like to engage in further due diligence to present a potential binding offer,” the company says.

The discussions with Thyssenkrupp have been conducted on a nonexclusive basis and it is uncertain the discussions will lead to any agreement or transaction, the company adds.

Liberty also notes that the terms of a potential binding offer could deviate from the current NBIO.

Thyssenkrupp says it has initiated a strategic realignment that it began in 2019 that involved reforming the company into a “group of companies” with a lean management model and a clearly structured portfolio, dividing its businesses into two categories: Those Thyssenkrupp will develop on its own or together with partners, and those for which Thyssenkrupp will pursue development paths outside the group.

Martina Merz, chief executive officer of Thyssenkrupp AG, says in a news release from mid-May that the company has “left no stone unturned in very carefully examining the individual development potential of each business for Thyssenkrupp.” She continues, “The most important aspect of this work was to decide which constellation would offer each unit the best prospects for the future – a place under the Thyssenkrupp umbrella, in a partnership or outside the company. With this reassessment of the portfolio, we have taken some difficult decisions that were long overdue and will now implement them systematically. Thyssenkrupp will emerge smaller but stronger from the transformation.”