Germany’s thyssenkrupp AG is rumoured to be considering divesting its steel and materials distribution division, thyssenkrupp Materials Services.
The multi-industries group has for years strived to separate from its steel production division, tk Steel Europe. It is now in the process of selling a 50% stake in tk Steel to Czech group EPCG, which has already acquired 20%.
While tk Steel Europe has long been a problem child for the group, tk Materials Services has been performing reasonably well. It is one of the biggest steel distributors in Europe and beyond, with more than 300 sites across all continents, and an order volume of €12.1 billion ($13.5 billion) in the last fiscal year.
Good earnings in its international supply chain business led to an increase in adjusted Ebit last fiscal by 15% to €204 million. Tk Steel, on the other hand, posted negative Ebit of €770m.
If true, the divestment would sever thyssenkrupp’s ties to its history as a steel company, but would also generate cash for the other miscellaneous activities of the group.
Speculation over the sale was reported by Bloomberg earlier this week. In a statement sent to Kallanish, thyssenkrupp AG did not confirm the plan but did not explicitly deny it either.
A German industry observer tells Kallanish he heard of the rumour weeks earlier, with €2 billion touted as a target price, The price is fair in view of the division’s assets, he notes. Although he doubts the offer would lure too many bidders, he has heard of interest being expressed by Asian companies.
