Thyssenkrupp will sell a 20% stake in its steel business to the energy holding controlled by Czech billionaire Daniel Kretinsky, a major breakthrough for the German conglomerate after years of unsuccessful attempts to divest the unit.
The parties are in talks for Kretinsky to buy a further 30% stake, aiming for a 50-50 joint venture, Thyssenkrupp said today, sending its shares up 9%.
The deal is centred around the idea that steel production will require cheap and green electricity going forward, areas where Kretinsky's holding EPCG can deliver with its 22 gigawatts of installed capacity across Europe.
For Thyssenkrupp, the transaction marks what it will hope will result in a balance sheet separation from a cyclical and struggling business it has been trying to sell, spin off or merge for years.
No deal value was disclosed, but brokerage Baader said that, unless additional writedowns were announced for the business down the line, Thyssenkrupp could receive €350-400m for the stake.
"Our goal is a future concept that leads to economic independence and business success for Thyssenkrupp Steel," Thyssenkrupp CEO Miguel Lopez said in a statement.
The news comes as Thyssenkrupp is revamping its steel business, whose roots stretch back more than 200 years, amid weakening demand and competition from cheaper Asian rivals.
In a statement, Kretinsky called the deal an important contribution to the decarbonisation of the steel industry, adding that "the entire European steel sector will undergo a similar transformation to the energy sector".
Thyssenkrupp has set a goal to switch its steel business, which employs about 27,000 people, to climate-neutral production by 2045, with the help of multi-billion government subsidies.
The German industrial conglomerate recently announced it will cut jobs and reduce capacity at its main Duisburg site, which was a sticking point in talks with Kretinsky and has sparked criticism from the German government.
Kretinsky, who has been on a European buying spree, is a former investment bank lawyer who built one of Europe's largest energy groups.
