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outokumpu to buy thyssen stainless steel unit in $3.5 bln deal

by:KingKonree     2020-05-24
FRANKFURT (Reuters)-
Oyj, Finland (OUT1V. HE)
It was bought by thysenk rup (TKAG. DE)
Stainless steel business in the transaction of value 2.
7 billion euros (2.
2 billion)
Designed to help resist cutting
Asian price competition
The deal will be financed by a 1 billion euro allotment of new Outokumpu shares, which will result in hundreds of layoffs in Germany as the Finnish stainless steel manufacturer aims to improve profitability in the industry, the industry has long been dragged down by overcapacity and the timing of integration.
The Finnish national entity that controls about 40% of Outokumpu\'s shares is expected to fund the proportional portion of the transaction, and the government may support the acquisition as it protects employment in Finland at least initially.
Analysts pointed out that the acquisition will help to increase the pricing capacity of producers in all regions who are struggling with cheap stainless steel imported from Asia for tableware, kitchen sinks and washing machines.
Outokumpu will pay 1 billion euros in cash for its Inoxum Department
35 to 40% market share in Europe
And will bear 0. 422 billion of the liabilities and issue 0. 235 billion of the loan notes to thysenk rup.
ThysenKrupp will also receive the new Outokumpu stock.
The expanded Finnish company has a 9% stake.
The deal will take Outokumpu from No.
Its competitors include the European market, including Aperam APAM. LU —
Split up by ancelormittal ISPA. AS last year —and Acerinox (ACX. MC)
No in the world.
1 stainless steel manufacturer.
Credit Suisse said that Aperam and Acerinox can achieve a win-win agreement. “If a . . .
The merger continued, and we calculated the \"free passenger\" benefits of 15% and 35% market value increases for Acerinox and Aperam respectively, \"the bank said.
Outokumpu aims to achieve cost synergies of 225 to 0. 25 billion euros by 2017 at the latest.
\"The price tag is not cheap, and the cost synergy schedule for Outokumpu shareholders is also very long,\" said Mika Karppinen of Evli Research . \".
ThysenKrupp\'s share price rose 3% at 21.
Greenwich Time 1331 euros, more than German blue-The chip DAX index.
GDAXI up 1. 0 percent.
Shares of Outokumpu fell 13. 9 percent.
\"There are some question marks: Outokumpu will be tied up with units and employees they really don\'t need for four to five years,\" said Erkki Vesola, an analyst at Swedish bank . \".
\"Competitors are getting free lunch.
Aperam\'s share price rose by 6.
0%, Acerinox rose. 9 percent.
Analysts said they expected the Finnish government to participate in the rights issue if Outokumpu\'s production facilities in Finland were not laid off.
\"This is the state in Finland that supports the stainless steel industry,\" said an analyst who declined to be named . \".
The four major shareholders of Outokumpu are Solidium, the Finnish national investment agency, which holds 30 shares.
84%. social insurance institutions in Finland are 8.
0%, Ilmarinen Mutual Pension Insurance Company and 3.
9%, with the Finnish National Pension Fund 1. 9 percent.
Outokumpu said the merger with Inoxum would result in German layoffs of 850 people as Krefeld and Bochum\'s two melting stores in the industrial hub of the Ruhr Valley, Germany
It does not say the work of Finland.
The two companies have promised that no other production sites will be closed, at least by the end of 2015, and no mandatory layoffs will be made until then.
But some people wonder if the factory is closed.
1 will be deleted.
Annual production capacity of 4 million tons, accounting for 16% of European production
It will be enough to reverse the situation.
Until five years ago, Europe was a net exporter of stainless steel, but global production capacity grew rapidly and production costs in Asia were lower, meeting about 20% of Europe\'s demand.
European stainless steel production has been losing money-
For some time, the recession has intensified overcapacity.
China, South Korea and Taiwan are the largest stainless steel exporters in Europe.
Corrosion also makes it ideal for barrels and pipelines in the chemicals, oil and gas industries.
\"The negative is that in them (
Thyson and belong to Outokumpu)
When Europe\'s capacity is cut, it is good for competitors. . .
This will not prevent Asian competitors from importing more stainless steel to Europe . \"
The IG Metall union in Germany has approved the planned sale, and the tissenk rup\'s Board of Supervisors is expected to formally approve the agreement later on Tuesday.
Rothschild Rott is advising ThysenKrupp on the deal. UL, Citigroup (C. N)
Deutsche Bank (DBKGn. DE).
The consultant for Outokumpu is JP Morgan (JPM. N)
Pereira. And the Nordic bank confidential agreement. ST.
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