Thyssenkrupp and Jindal Steel Pause Stake Sale Talks

Thyssenkrupp AG said it and Jindal Steel International have paused discussions on a potential stake sale in the German firm's steel unit, as the assumptions for the deal have changed.

The company said the assumptions for the deal have changed, citing progress in restructuring its steel business and a more favourable regulatory environment in Europe, which offers better growth prospects despite high energy costs.

“The original assumptions and prerequisites for a potential sale of Thyssenkrupp Steel have significantly changed in recent months,” the German company said in a statement on Saturday. “Thyssenkrupp has made significant progress in realigning its steel segment,” it said, adding that the regulatory environment for the industry in Europe has become “fundamentally more favorable” and “offers the sector significant potential for stabilization and growth” despite the current surge in energy prices.

A deal had become increasingly elusive in the months since Jindal submitted a non-binding offer last fall to buy Thyssenkrupp Steel Europe outright. By March, senior officials at Thyssenkrupp had begun to doubt that an agreement could be reached, Bloomberg reported at the time.

The sides hit roadblocks over how much funding the Indian group would be able to provide through a prolonged downturn in Europe’s steel market and how much cash Thyssenkrupp itself would need to inject into the unit before handing control to a new owner.

The German company could have to commit at least €2 billion ($2.3 billion) over time to make a deal work, people familiar with the negotiations said at the time.

Thyssenkrupp Steel has been seeking billions of euros in subsidies from the German government to help fund a raft of decarbonization measures, but uncertainty around approvals for this state aid are also complicating negotiations, the people said.

Thyssenkrupp’s goal remains to make the unit autonomous, the company said on Saturday.