-- Written by Andrew Bulkeley
BERLIN (The Deal) -- German industrial conglomerate ThyssenKrupp on Saturday, Nov. 30, announced the long-anticipated sale of its U.S. steel plant and said it would also buy back some stainless assets from Finland's Outokumpu after that seller had trouble finding a buyer.
ThyssenKrupp, of Dusseldorf, said Luxembourg's ArcelorMittal (MT) and Japan's Nippon Steel & Sumitomo Metal would pay $1.55 billion for its Alabama steel plant. The two also agreed to buy 2 million tons of steel slabs annually from a sister plant in Brazil with annual capacity of five million tons.
Thyssen had promised to sell both the Alabama and Brazilian plants, known collectively as Steel Americas. The unit was built by former CEO Ekkehard Schulz, who hoped to produce steel cheaply Brazil and then finish the product in the U.S.
However, the Brazilian economy grew more quickly than expected, forcing labor costs up just as steel prices slipped. Thyssen then struggled to find a buyer and on Saturday said it would now also sell new shares equivalent to as much as 10% of its share capital to help offset the damage done by the plants. It wants to issue up to about 51.4 million new shares, which would be worth about 924.7 million euros($1.25 billion) at the current price.
The company also warned it may post its fourth consecutive loss in the year ending Sept. 30 after losing 1.4 billion euros in fiscal 2013 as new CEO Heinrich Hiesinger works to get the company back on track. More restructuring is expected since Swedish activist investor Cevian Capital AB recently increased its investment in the company to 5.2%.