Thyssenkrupp memo could portend steel spinoff

Germany-based Thyssenkrupp, after ending negotiations with the GFG Alliance on the sale of its steelmaking assets, reportedly is warning its steel business unit employees to prepare for additional changes.

Reuters has reported gaining access to an internal corporate memo from Thyssenkrupp Chief Executive Martina Merz advising the steel business unit it must “cut costs to reach a point where it no longer needs financial support” from the rest of the company’s operations.

From October 2020 to mid-February of this year, Thyssenkrupp was engaged in talks with the Liberty Steel subsidiary of the United Kingdom-based GFG Alliance for that firm to purchase all or most of its steelmaking facilities. GFG Alliance has subsequently run into issues with the downfall of a financing firm with which it worked closely.

The GFG-Thyssenkrupp talks broke off in mid-February, with Thyssenkrupp’s Chief Financial Officer Dr. Klaus Keysbergas stating in a news release, “Our ideas about the corporate value and the structure of the transaction were far apart.” The German company subsequently canceled a March 12 meeting that had been scheduled to include a vote on the Liberty Steel offer.

Reuters concludes in its write-up on the March memo from Merz, Thyssenkrupp “will now develop the business on its own, which could result in a listing or a partnership.”

On the operations side, U.K.-based Primetals Technologies has announced Thyssenkrupp is “forging ahead” with capital investment projects at two mill sites in Germany. According to Primetals, a new continuous caster and a hot strip mill will be installed at the firm’s Bruckhausen, Germany site, while a mill in Bochum, Germany, will receive new rolling equipment.