German conglomerate Thyssenkrupp said on Wednesday it had ended talks to sell its steel division to Britain’s Liberty Steel, citing differences overvalue and structure in a potential deal.
Liberty Steel, which is led by commodities tycoon Sanjeev Gupta, last month submitted a firmed-up nonbinding bid for Thyssenkrupp’s steel division, the continent’s No. 2, which sources said included commitments to protect jobs and sites.
“We regret this step because we perceived Liberty Steel as a serious partner in the process,” Thyssenkrupp Chief Financial Officer Klaus Keysberg said in a statement.
Thyssenkrupp’s move to terminate talks shifts the focus to the group’s two other scenarios for its steel division: keeping it or spinning it off to shareholders. Both would entail major additional cost and job cuts.
In an internal memo to staff, Keysberg said differing views over the value of the division, financing structure and guarantees were the key reasons to end discussions.
“Overall, ideas were so far apart that continuing discussions wouldn’t have gotten us any further,” Keysberg said in the memo seen by Reuters.
Liberty Steel’s bid assumed a negative equity value for Thyssenkrupp’s steel division of more than 1.5 billion euros ($1.8 billion), according to people familiar with the matter.
Recent broker reports were more optimistic on the back of first-quarter results released last week, putting that number somewhere between 400 million euros and zero.
Liberty Steel, Europe’s fourth-largest steelmaker, earlier this week made a new offer addressing some of the concerns, one of the people said.
It said it was keeping the door open for talks.
“Liberty remains confident that it has put forward the only long-term sustainable plan for Thyssenkrupp’s steel business and we will continue to engage to seek to eliminate the valuation gap in due course,” a spokesman said.
Source: Reuters.com