Thyssenkrupp Opens Books to Liberty Steel

Sanjeev Gupta's Liberty Steel gets access to Thyssenkrupp Steel's books.
Sanjeev Gupta's Liberty Steel gets access to Thyssenkrupp Steel's books.

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Thyssenkrupp AG said Wednesday, Dec. 2, it has agreed to give Sanjeev Gupta’s Liberty Steel Group access to the data room at its struggling steel business, as the German industrial conglomerate examines its options for the unit.

In a joint statement emailed by both sides, Thyssenkrupp and Liberty Steel said they had agreed to “enter a further process phase” in their negotiations.

“Liberty Steel will shortly begin a detailed due diligence and thus gain insight into key business data of Thyssenkrupp’s steel business,” the statement said.

Liberty Steel, a subsidiary of Liberty House Group Holdings Pte. Ltd. and part of the Gupta family’s GFG Alliance, on Oct. 16 said it had joined the bidding for Thyssenkrupp Steel Europe AG with a non-binding indicative offer it said was supported by a number of financial institutions.

Fresh from its acquisition of the French business of British Steel Ltd. in August, Liberty Steel said at the time that it had the right “transformation experience and entrepreneurial approach” to create a combined group that would be well positioned to tackle the challenges faced by the European steel industry.

Also on Oct. 16, GFG Alliance announced the appointment of Premal Desai as group COO of business development from the start of 2021.

Desai knows the German steel business well, having served as chairman of Thyssenkrupp Steel Europe from June 2019 to the end of February 2020, according to Boardex, a relationship-mapping service that is a sister company of The Deal.

He had previously served in various senior roles at Thyssenkrupp from 2006 rising to group head of strategy before moving to CFO of Thyssenkrupp Steel Europe in April 2015. He served in that post during Thysenkrupp’s aborted attempt to merge the steel business with Tata Steel Europe Ltd.

Tata Steel meanwhile is in merger talks with Swedish steelmaker SSAB AB, potentially taking two possible rivals for the Thyssenkrupp business out of the way, while Germany’s Salzgitter AG would likely meet similar antitrust hurdles to those faced by Tata Steel. Liberty Steel reportedly believes that its products are complementary to those of Thyssenkrupp Steel and are therefore less likely to attract regulatory vetoes.

However, Liberty Steel’s approach has thus far faced bitter opposition from German trade union IG Metall, which has been lobbying for the government to take a stake and provide capital for Thyssenkrupp Steel to survive as a German business.

While the €17.2 billion ($20.8 billion) sale of Thyssenkrupp’s elevators business to a private equity consortium of Advent International Corp., Cinven Partners LLP and German coal industry foundation RAG Stiftung earlier in 2020 has given the conglomerate a financial cushion to hold the steel unit for longer if necessary, Thyssenkrupp CEO Martina Merz is still keen to get out of the steel business eventually.

The group said in the course of an annual press conference in November that it is aiming for a decision on the future of the business in the spring of 2021.

This article originally was posted on The Deal on December 3, 2020 by Ron Orol. View the original article here.

Follow Jonathan Braude on Twitter and LinkedIn.

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