Thyssenkrupp Shares Jump on Tata Steel Tie-Up Talk
01 Aprile 2016 - 12:10PM
Dow Jones News
FRANKFURT--Thyssenkrupp AG's shares soared Friday following a
report that India's Tata Steel Ltd. may be interested in taking a
stake in the German industrial conglomerate's European steel
business.
Thyssenkrupp's shares were up as much as 7.7%, in early morning
trading.
German newspaper Rheinische Post reported that talks between
Thyssenkrupp and Tata Steel were in an "advanced stage," citing
government sources. The two sides would most likely pursue a joint
venture, with an option for Tata Steel to increase its stake down
the road, according to the paper.
Thyssenkrupp and Tata Steel declined to comment on the
report.
Tata Steel is Europe's second-largest steelmaker by production
capacity, after Luxembourg-based ArcelorMittal SA.
News of a possible tie-up comes as the steel sector has been
suffering from oversupply, which has in turn driven down prices.
That trend has been exacerbated by an economic slowdown in China,
the world's largest steel producer and user.
Tata Steel on Wednesday announced it would explore selling its
struggling U.K. steel business in a move that could threaten
thousands of local jobs. In recent months, the company had
announced several rounds of layoffs at its U.K. operations, where
it has three integrated steelmaking sites.
Thyssenkrupp Chief Executive Heinrich Hiesinger has said in the
past that consolidation in the sector would make sense, but has
also stressed that it would be difficult to find a buyer for the
company's beleaguered European steel operations.
Analysts and investors have long suspected that Thyssenkrupp
could shed its European steel division, as Mr. Hiesinger continues
to refocus the company around its capital goods businesses.
"[Combining] Thyssenkrupp and Tata is seen as the best solution
in Europe, both in terms of products and regions," said analyst
Dirk Schlamp of Germany's DZ Bank, noting that such a measure would
stabilize the market. "Thyssenkrupp could aim at completely exiting
the steel business in the medium to long term," Mr. Schlamp
added.
Write to Natascha Divac at natascha.divac@wsj.com
(END) Dow Jones Newswires
April 01, 2016 05:55 ET (09:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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