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The
talks, to be announced as part of a strategy revamp later on
Monday, follow a 372 million euro ($402 million) loss that
Thyssenkrupp Steel Europe, Germany's largest steelmaker,
reported in the first half of the group's fiscal year.
The update is expected to accelerate Thyssenkrupp's dismantling,
a process that started last year when the group essentially put
most of its divisions, including car parts, warships and plant
building on the block.
Shares in Thyssenkrupp, which have lost nearly two-thirds of
their value over the past 12 months after a raft of profit
warnings and dwindling investor confidence, were 7% higher at
1147 GMT.
Ever since a strategy u-turn a year ago, which saw Thyssenkrupp
dropping plans for a joint venture with India's Tata Steel <TISC.NS>
in favour of a sale of its prized elevator unit, the group
continued to champion the merits of steel consolidation.
Sources told Reuters that contact between Thyssenkrupp and Tata
Steel never broke off and that both were still in talks about
consolidation.
Business paper Handelsblatt said that Thyssenkrupp was also in
discussions with Sweden's SSAB <SSABa.ST> and China's Baoshan
Iron & Steel (Baosteel) <600019.SS> and that both were
interested in a majority of the German firm's steel unit.
Thyssenkrupp, Tata Steel Europe and Baosteel declined to comment
as did SSAB, whose shares were also 7% higher. Tata Steel Europe
had no immediate comment.
Knut Giesler, who heads powerful union IG Metall in North
Rhine-Westphalia, where Thyssenkrupp is based, said workers
would prefer a deal with German peer Salzgitter <SZGG.DE> or
other companies from the Saar region in southwestern Germany.
"If you are teaming up with a foreign partner the majority needs
to stay in Germany," Giesler said.
Labour representatives have immense clout at Thyssenkrupp and
hold half the seats on the group's supervisory board and Giesler
said the union would not approve further job cuts at
Thyssenkrupp Steel Europe.
Thyssenkrupp's supervisory board, in a meeting scheduled for
Monday, is also expected to discuss the auction of Plant
Technology, the division building chemical, fertiliser and other
industrial plants.
Indicative bids were submitted last month but those were based
on a business plan before the coronavirus pandemic kicked in,
having effectively put the process on hold, a second source
said.
"This will only go ahead if the coronavirus impact is clear and
bidders will be able to recalculate their asking prices," the
source said, adding Denmark's FLSmidth <FLS.CO>, Italy's Maire
Tecnimont <MTCM.MI> and U.S.-based Fluor <FLR.N> were in the
race.
(Additional reporting by Johannes Hellstrom in Stockholm and Min
Zangh in Beijing; Editing by Sabine Wollrab, Michelle Martin and
Louise Heavens)
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