Sanjeev Gupta's Liberty Steel Group makes its offer with the European steel sector weighed down by oversupply caused by cheap Chinese imports and the virus fallout
London (AFP) - Liberty Steel Group, owned by Indian-British billionaire Sanjeev Gupta, said Friday it had made a indicative offer for the steel activities of troubled German industrial giant Thyssenkrupp.
It comes with the European steel sector heavily weighed down by oversupply caused by cheap Chinese imports and the economic fallout from the coronavirus pandemic.
Liberty said in a statement that it “is open to intensify the dialogue with Thyssenkrupp and would like to engage in further due diligence to present a potential binding offer”.
Thyssenkrupp said it would “carefully look” at the offer while continuing “discussions with other potential partners”.
The German group added in a statement:
“Our goal is to make the steel business sustainably fit for the future. It is important for us to find the best solution.”
German weekly magazine Der Spiegel reported that Thyssenkrupp was in discussions also with Tata Steel and Sweden’s SSAB over a potential sale.
Meanwhile, Thyssenkrupp chief executive Martina Merz has not ruled out further state help.
The group has already received one billion euros in loans guaranteed by Berlin, through state-owned bank KFW.
Thyssenkrupp shares were up 8.8 percent in late Frankfurt trading, having soared 25 percent earlier on Friday.
Prior to the pandemic, the German industrial giant had suffered also from the failure of a proposed steel merger with India’s Tata.
The European Commission last year blocked a tie-up on competition grounds.
- ‘Green future’ -
Fearing massive job cuts amid Thyssenkrupp’s troubles, workers belonging to German union IG Metall demonstrated on Friday to demand a rescue package from Berlin.
“We still reject a takeover from abroad,” the union said in a statement.
“In order to solve the diverse problems, Thyssenkrupp Steel does not need a new owner, but capital.
“In particular, the conversion to climate-neutral steel production requires investments that no company in the industry can afford,” it added.
Liberty – a global steel and mining business with annual revenues of about $15 billion (13 billion euros) – agreed that the green transition could not be done alone.
“From an environmental perspective, Liberty Steel is a leader in sustainable industry with a mission to become carbon neutral by 2030,” it said Friday.
“But to transform a whole industry a European approach is required.
“A joint entity would be well positioned to create the sustainable ‘green steel’ industry leader in Europe” and “contribute to the long-term recovery of the sector”, Liberty added in its statement Friday.
Germany adopted in July a plan to make its steel sector “carbon neutral” by 2050, although without any concrete measures.
Steel will need 30 billion euros by 2050, and 10 billion by 2030, to become carbon neutral, according to industry figures.
Part of Gupta’s Liberty House Group, Liberty employs 30,000 staff in more than 200 locations worldwide and it too has suffered a drop in demand for its steel products owing to fierce Chinese competition.
Rival British Steel has meanwhile been rescued by Chinese industrial giant Jingye Group in the past year.