With the entry of Czech billionaire Daniel Kretinsky, thyssenkrupp wants to stabilize its steel division, which has been in crisis for a long time.
Kretinsky’s company EPCG, which has interests in various energy companies, will initially take over 20 percent of the shares in the steel business, as thyssenkrupp surprisingly announced on Friday. The aim is a joint venture in which the two partners each hold 50 percent of the shares. “The entry of EPCG combines the leading materials know-how of thyssenkrupp Steel Europe with the energy expertise of EPCG.” The IG Metall union, which has a strong presence at thyssenkrupp, reacted angrily to the short-notice announcement.
Both parties agreed not to disclose the terms of the transaction. Baader analysts put the potential revenue for the package at 350 to 400 million euros.
“Our goal is a future concept that leads to economic independence and entrepreneurial success for thyssenkrupp Steel, meets the requirements of climate protection, avoids redundancies for operational reasons and finds broad acceptance,” said thyssenkrupp boss Miguel Lopez. “The agreement to acquire the 20 percent stake in thyssenkrupp Steel Europe is a first step on the planned path towards a broader strategic partnership,” added Kretinsky. The transaction should be completed in the current 2023/24 financial year (at the end of September).
CONSENT FROM THE KRUPP FOUNDATION – IG METALL ANGRY
As a strategic partner, EPCG will ensure that the joint venture is sufficiently supplied with energy, hydrogen, green electricity and other energy raw materials, the partners announced. The self-made billionaire Kretinsky grew up as an investor in the energy business. He currently holds numerous investments in various industries in Europe – from trading companies such as Metro to media groups and logistics.
The Krupp Foundation, which is the largest individual shareholder in the Ruhr group with around a fifth of the shares, welcomed the plans. “The foundation has great confidence in Miguel Lopez’s board of directors and remains convinced of the company’s potential to become competitive and dividend-paying again.”
The employee representatives felt taken by surprise. “The news about EPCG’s entry comes as a surprise,” said the second chairman of IG Metall and deputy chairman of the supervisory board of thyssenkrupp, Jürgen Kerner. Co-determination only found out about the decision a few hours before the public. “That’s not good style and not a good start.” There must now quickly be a viable future concept for the further conversion towards green steel – and finally a return to respect for co-determination. “Otherwise the conflict is programmed.”
The largest German steelmaker recently announced that it wanted to reduce capacity and cut jobs. The works council and IG Metall have invited people to a meeting in the MSV Duisburg stadium on Tuesday. They expect that a large number of the approximately 27,000 steel workers will take part.
Heavy industry, with industry giants such as ArcelorMittal and Salzgitter, has been struggling for years with high energy and raw material costs and competition from the Far East. The industry also plays a key role in the energy transition in Germany because of its high CO2 emissions. It is one of the country’s biggest air polluters. The federal government and the state of North Rhine-Westphalia are contributing around two billion euros to the costs of a new, climate-friendly production facility. The federal government does not expect the new investor at thyssenkrupp to change course in the transformation towards green steel. “We also have no evidence that this calls into question the path taken to decarbonize the company,” said a spokesman for the Federal Ministry of Economics in Berlin.
Not least because of its strong dependence on economic developments and the resulting fluctuating income, the group had repeatedly put the steel subsidiary into disarray. A planned joint venture with competitor Tata Steel Europe failed, as did a sale to Liberty Steel.
thyssenkrupp – Apart from EPH, no steel discussions with investors
The largest German steel company thyssenkrupp says it wants to concentrate fully on the future of the steel division on the planned joint venture with the EPH Holding of the Czech billionaire Daniel Kretinsky.
“We are in discussions with EPH. Beyond that, no discussions are being held now,” said CEO Miguell Lopez on a conference call with journalists on Friday.
The federal government sees no change in course away from green steel after the thyssen deal
The federal government does not expect the new investor at thyssenkrupp to change course in the transformation towards green steel.
“We also have no evidence that this calls into question the path taken to decarbonize the company,” said a spokesman for the Federal Ministry of Economics on Friday in Berlin. All companies involved would be committed to the goal of making the industry more sustainable. The billion-dollar thyssen funding from the state does not need to be reconsidered. The aid is linked to clear conditions that must be implemented on site. This does not change due to the partial entry of an investor.
The spokesman called the deal a purely private business decision. The Essen-based industrial group has reached an agreement with Czech billionaire Daniel Kretinsky about entering the steel division. The aim is a joint venture in which the two partners each hold 50 percent of the shares, both sides announced at the end of the week. In a first step, Kretinsky’s company EPCG acquired 20 percent of the shares. “In addition, the parties are discussing the acquisition of a further 30 percent of the shares in the steel business by EPCG,” it said. Both parties agreed not to disclose the terms of the transaction.
thyssenkrupp steel employees skeptical about joining: energy company
Employee representatives have expressed criticism of the EP Corporate Group’s planned entry into Germany’s largest steel manufacturer thyssenkrupp Steel. The news comes as a surprise, said the deputy chairman of the supervisory board of the parent company thyssenkrupp, Jürgen Kerner, on Friday, according to a statement. “Co-determination only found out about the decision a few hours before the public. That’s not good style and not a good start.” Kerner is also deputy chairman of IG Metall.
thyssenkrupp announced on Friday morning that Czech billionaire Daniel Kretinsky’s company EPCG would initially take over 20 percent of the steel division. The goal is a joint venture in which thyssenkrupp and EPCG each hold 50 percent. It was known that thyssenkrupp was negotiating an entry with Kretinsky.
The employee side has never spoken out against an investor in principle. “But we expect participation of co-determination on an equal footing and binding commitments,” demanded Kerner. What is now needed is a viable future concept for the further conversion towards green steel and a “return to respect for co-determination”. The relationship between employee representatives and management around CEO Miguel López has long been considered strained.
The chairman of the general works council of thyssenkrupp Steel, Tekin Nasikkol, sees a need for clarification: “Following the steel board’s announcement two weeks ago that it would reduce crude steel capacities from 11.5 to 9.5 million tons per year and thereby reduce personnel, the planned entry of EPCG now has even more questions.” What intentions does EPCG owner Kretinsky have? What does his concept look like? Both will be evaluated carefully and critically. “We reject any break-up or shrinkage,” emphasized Nasikkol.
The district manager of IG Metall NRW, Knut Giesler, called for compliance with the collective agreement, which excludes operational dismissals until the end of March 2026. These would also have to be excluded beyond 2026. Location guarantees would also have to be given. There is also a need for a future concept for the steel manufacturer HKM in Duisburg, in which the thyssenkrupp steel division has a 50 percent stake.’
thyssenkrupp picks up – solution for steel business spurs on
The emerging solution to the steel business gave stocks a recovery rally on Friday. The news of Czech billionaire Daniel Kretinsky’s entry was also met with applause from analysts.
Ultimately, the shares of the industrial and steel group rose by 6.17 percent to 4.733 euros as the front runner in the friendly MDAX. In doing so, they also made up for half of the loss they had suffered during the downward trend of the past two weeks. The shares of steel competitor Salzgitter recently rose by an above-average 2.8 percent in the SDAX small-cap index.
Since the beginning of the year, thyssenkrupp has still recorded a loss of around 23 percent, making the shares one of the biggest losers in the index of medium-sized German stock exchange companies. The situation is similar at Salzgitter with an annual loss of 16 percent so far.
After months of negotiations, thyssenkrupp announced that it had agreed with Kretinsky that his holding EPCG would initially take over 20 percent of the thyssenkrupp Steel Europe division. It was agreed not to disclose the terms of the transaction. Negotiations are also underway to take over a further 30 percent of the steel business. The aim is still to form a joint venture in which both partners each hold 50 percent.
Moses Ola from the US bank JPMorgan spoke of a first step for the desired equal joint venture. The resulting complete entrepreneurial independence of the division would be the best way for thyssenkrupp to increase its value, strengthen its own balance sheet and stop the outflow of cash. Since thyssenkrupp Steel Europe will be fully consolidated in the balance sheet by then, he is currently not expecting any changes to the consensus estimates.
Morgan Stanley expert Alain Gabriel emphasized that the transaction would allow thyssenkrupp to reduce future costs for restructuring the company and reducing CO2 emissions. The possible future partnership would also help the people of Duisburg to secure renewable energies in the form of hydrogen and “green” electricity. This is crucial for the decarbonization of the steel business.
The step is further proof that the company is taking bold measures to achieve its goals, praised analyst Christian Obst from Baader Bank. If no new ones are added after the massive write-downs in the final quarter of 2023, Kretinsky’s group is likely to receive 350 to 400 million euros for the sale of the 20 percent stake. Meanwhile, the pressure is now increasing to define a long-term strategy together with the new partner. Many questions still remain unanswered and the path ahead will not be easy.
FRANFKURT/MUNICH/DUISBURG/ESSEN/BERLIN (dpa-AFX / Reuters)