Mumbai: German steelmaker Thyssenkrupp has called off its joint venture plan with Czech billionaire Daniel Kretinsky’s EP Group, as it considers rival suitor Naveen Jindal’s acquisition offer.
Both EP Group and Thyssenkrupp AG “mutually agreed” to end the discussions on the possible equal joint venture for Thyssenkrupp Steel Europe, according to a joint statement.
“EPG respects Thyssenkrupp AG’s preference to concentrate on discussions with Jindal Steel International about its submitted indicative bid for Thyssenkrupp Steel Europe and has agreed to withdraw from further talks, return its 20 percent stake in Thyssenkrupp Steel Europe, and receive reimbursement of the purchase price it paid to Thyssenkrupp AG,” both the companies confirmed in an emailed statement to Mint.
Clear path for Jindal
With the deal scrapped, India’s Jindal now has a clear run at the acquisition, free of competition.
Last month, Naveen Jindal, through his private firm Jindal Steel International, made an unsolicited bid to acquire Thyssenkrupp Steel Europe, a unit of German industrial and technology major Thyssenkrupp AG.
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Before Jindal’s bid, EPG had acquired a 20% stake in Thyssenkrupp Steel Europe in July last year, with an agreement to discuss an additional 30% for a 50/50 joint venture.
The bid amount remains undisclosed, but Jindal Steel International has committed €2 billion to support decarbonization and safeguard steelmaking in Germany. This will include completion of an under-development direct reduced iron (DRI) plant at Duisburg in the Ruhr region of Germany, and installation of additional electric arc furnaces to process DRI into steel using electricity.
Following the cancellation of the JV and ongoing discussions with Jindal, the mood at Thyssenkrupp is quite positive.
“Executives and employees expressed excitement following the news of Jindal’s bid,” said an executive on the condition of anonymity. “Jindal had already written to the union and the head of the union prior to officially announcing their bid.”
A delegation of executives led by Naveen Jindal is headed to Germany next week for further discussions with Thyssenkrupp as well as other stakeholders, a second executive said on the condition of anonymity. The delegation will be explaining their proposed acquisition and post-acquisition strategy to the company and its stakeholders.
If the deal goes through, Jindal would gain a strong European base and rank among the world’s top steel barons, overseeing close to 25 million tonnes per annum (mtpa) of capacity. This would include the Mumbai-listed Jindal Steel Ltd’s 10 mtpa capacity in India. Jindal Steel is not part of the current bid.
The deal is being spearheaded by 29-year-old Venkatesh Jindal, the Yale and Harvard-educated heir apparent and son of chairperson Naveen Jindal, marking a defining moment for the group’s next-generation leadership. He is part of the core team in Germany driving negotiations for the high-stakes acquisition of Thyssenkrupp Steel Europe.
Alongside him are Naveen Jindal, Narendra Misra, the group’s director of European operations, and a small team of senior executives currently engaged in talks.
After Tata Steel and Lakshmi Mittal, chair of ArcelorMittal, the world’s largest steel producer outside China, this acquisition would make Jindal Steel the third Indian steelmaker to build a significant manufacturing base in Europe.
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