ThyssenKrupp, Outokumpu to Combine Stainless Steel Businesses

ThyssenKrupp's Krefeld, Germany facility.

The management board of ThyssenKrupp AG, based in Germany, has tentatively approved an agreement to merge its Inoxum business with the Finnish metals company Outokumpu. Inoxum is ThyssenKrupp’s stainless steel business.

As part of the agreement, ThyssenKrupp says its Krefeld, Germany facility, which melts scrap metal, will be shut down by the end of 2013. The company’s melt shop in Bochum, Germany, which also melts scrap metal, will be kept open until the end of 2016.

All German production sites of Inoxum will be preserved without restrictions at least until 2015. The deal values Inoxum at about $3.533 billion (€2.7 billion).

The combined entity will operate under the name of Outokumpu and will be headquartered in Espoo, Finland. Mika Seitovirta, CEO of Outokumpu, will continue as the CEO of the combined entity. Solidium, a Finnish government-owned investment company with a current shareholding of 30.8 percent in Outokumpu, has committed to support the transaction by participating in the Outokumpu capital increase.

Under the agreement, ThyssenKrupp would obtain a minority stake of 29.9 percent in the new company. In addition, the consideration would include a significant cash payment from Outokumpu to repay ThyssenKrupp’s financial receivables towards Inoxum as well the assumption of third-party financial liabilities and pension liabilities of Inoxum by Outokumpu.

In May 2011 ThyssenKrupp had announced plans to divest its stainless steel operations to focus on its core businesses.