ThyssenKrupp shares fell as Steel Americas sale drags on
Reuters reported that ThyssenKrupp asked bidders to resubmit offers for its loss making US and Brazilian steel mills as it struggles to attract interest at high enough prices.
Fears of a long, drawn out sale process sent shares in ThyssenKrupp down almost 4% on October 29th 2012.
The company asked for the resubmissions because it deemed the initial bids too low.
ThyssenKrupp CEO Mr Heinrich Hiesinger wants to sell the mills separately for the combined remaining book value of EUR 7 billion, although analysts expect the value to be more in the EUR 3 to EUR 4 billion range.
One trader said USD 9 billion seemed unreasonable and the deal could fail if the group insisted on that amount.
The company has so far invested about EUR 12 billion altogether in the two sites.
The source said while Thyssen accepted that EUR 7 billion was unlikely, it was still looking for somewhere between EUR 3 to EUR 4 billion and that figure. The group also asked for bids to be resubmitted in order to clarify which bidders would need to team up with partners for the mills.
The company said in May 2012 that it was considering all options for the loss making steel mills, including a partnership or a sale, to halt losses and concentrate on its European business.
The plants were meant to give ThyssenKrupp a foothold in the Americas after it lost out to Arcelor in a bidding war for Canada's Dofasco in 2006, but the mills have struggled with rising costs and sluggish demand.
ArcelorMittal, US Steel, Nucor, JFE Steel and CSN are expected to be among bidders. POSCO has only made a preliminary offer, a source previously said, while Baosteel, also previously cited as interested, has dropped out.
Steel Americas, the division that includes both sites, posted an adjusted loss before interest and tax of EUR 778 million for the nine months to the end of June 2012 and is reportedly heading for a full year loss of more than EUR 1 billion.
ThyssenKrupp is being advised on its review of Steel Americas by Goldman Sachs and Morgan Stanley.
Source - Reuters