FRANKFURT (Reuters) – Thyssenkrupp will still seek partners for its steel operations after abandoning a European merger with India’s Tata Steel, Chief Executive Guido Kerkhoff said in comments published on Sunday.
FILE PHOTO: Guido Kerkhoff, CEO of steelmaker Thyssenkrupp AG, gestures during the annual shareholders meeting in Bochum, Germany, February 1, 2019. REUTERS/Wolfgang Rattay/File Photo
Kerkhoff ditched a restructuring plan on Friday, in which the merger was a key part, and resolved instead to transform the steel-to-submarines group into a holding company and list its profitable elevators business.
He has since agreed on a way forward with labor unions for his new strategy, which foresees 6,000 job cuts, about 4% of the Thyssenkrupp workforce. The blueprint will go to a supervisory board vote on May 21.
Thyssenkrupp abandoned its long-planned merger of its steel business with the European operations of Tata Steel, which would have created the region’s No.2 producer after ArcelorMittal, due to opposition from European Union regulators.
“Of course, with steel, we are looking to see what other consolidation options there are,” Kerkhoff told the Handelsblatt business daily’s online edition.
“But with the current position of the European Commission, I don’t see the possibility of bigger mergers. As a result, we will remain the majority shareholder.”
Thyssenkrupp, which has warned it would report negative cash flow this year, is seeking a financial shot in the arm from the partial float of its elevators division.
“We will get cracking on that as quickly as possible and then see what the right moment is,” Kerkhoff told Handelsblatt.
Asked whether investors could expect a special dividend from the float’s proceeds, Kerkhoff said: “We want to strengthen the balance sheet of Thyssenkrupp to gain more room for maneuver on the restructuring. That has absolute priority.”
Activist investors have been clamoring for Thyssenkrupp to monetize its elevators business, which analysts estimate could be worth as much as 14 billion euros ($15.7 billion), twice the market capitalization of the parent company.
Reporting by Douglas Busvine; Editing by Edmund Blair