Thyssenkrupp sells stake in steel unit to Czech billionaire

FRANKFURT, Germany — Thyssenkrupp said recenetly it had agreed to sell a stake in its steel business to a group owned by Czech billionaire Daniel Kretinsky, as the German conglomerate seeks to overhaul the long-troubled unit.

Kretinsky's EP Corporate Group (EPCG) will initially acquire 20 per cent of Thyssenkrupp Steel Europe, in a deal expected to close in the current financial year, the companies said in a statement.

Talks are ongoing for EPCG to take a further 30 per cent stake at a later point with the aim of eventually reaching a 50-50 joint venture.

No financial details were disclosed.

Thyssenkrupp has long sought a solution for its underperforming steel unit, which has been hammered in recent years by cheap competition from Asia and high energy prices, while facing costly investments as part of an industry-wide shift towards greener production processes.

"Together, we want to create a high-performance, profitable and future-oriented steel company that reduces the costs of decarbonisation to a more competitive level and thus accelerates the green transformation of the steel industry," said Thyssenkrupp CEO Miguel Lopez.

Kretinsky said he was convinced that "this joint venture concept will establish a more resilient position for Thyssenkrupp Steel", which he described as "one of the traditional pillars of the German economy".

Shares in Thyssenkrupp soared by more than 10 per cent on news of the deal in early morning trading in Frankfurt.

Thyssenkrupp said earlier this month it would cut jobs and reduce production at its key steel plant in Duisburg because of the difficult market environment.

The exact number of job losses had not yet been decided, it added. Thyssenkrupp Steel employs about 27,000 people overall, around 13,000 of them at the Duisburg site in western Germany.

Steel production at the plant would fall from 11.5 million tonnes a year to 9-9.5 million tonnes, it said.

Thyssenkrupp added that it planned to step up efforts to produce steel with lower carbon emissions in line with tighter environmental restrictions at Duisburg. Last year it received approval for 1.45 billion euros ($1.55 billion) in state aid for the shift to cleaner steel.