Thyssenkrupp is going to sell the steel business

Thyssenkrupp may sell most of its steel division, the CEO said Tuesday, marking a historic change in strategy for the German conglomerate that has built its 200-year legacy as an industrial leader in the business.

“Nothing is banned anymore,” Martina Merz said when Reuters asked her if Thyssenkrupp could sell a majority stake in the metals business.

The CEO spoke hours after announcing that the group was in talks with metallurgical counterparts about consolidation opportunities. She said the coronavirus pandemic opens up new opportunities for collaboration.

“We are using the full range of opportunities,” she told reporters by phone. “This means that all forms of consolidation are considered, including mergers, acquisitions, us acquiring peers, and our independent development of a division.”

The fact that the steel division is no longer considered an integral part of Thyssenkrupp represents a fundamental shift for the company, which began operations in 1811, when Friedrich Krupp established a cast steel plant.

The steel business, Europe’s second-largest in terms of sales, is reeling from weakening demand, cheap Chinese imports and a failed attempt to merge it with Tata Steel’s European arm, a deal blocked by antitrust companies.

Thyssenkrupp shares have lost nearly two-thirds of their value in the past 12 months following a string of earnings warnings and declining investor confidence.

The announcement accelerates the dismantling of Thyssenkrupp, a process that began last year when the group sold its crown jewel: its elevator division. Some investors say the huge conglomerate that makes everything from auto parts to submarines needs to be smashed to maximize its value.

Contacts between Thyssenkrupp and Tata Steel never broke off and that both were still negotiating a consolidation.

Thyssenkrupp is also in talks with Sweden’s SSAB and China’s Baoshan Iron & Steel, according to sources familiar with the matter.

Baosteel declined to comment, as did SSAB and Tata Steel Europe.

The steel business accounts for more than a fifth of Thyssenkrupp’s sales, making it the company’s second-largest division.

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