Wuhan Steel to Buy ThyssenKrupp Unit, Entering German Market

Wuhan Iron & Steel Co. agreed to buy ThyssenKrupp AG (TKA)’s tailored blanks division, marking China’s entry into German steel-rolling as the Asian country seeks to meet growing demand from automakers.

The tailored blanks unit, which supplies body systems for cars, has two of its 13 plants in Germany, Stefan Ettwig, a spokesman for Essen-based ThyssenKrupp, said by phone after the company announced the agreement. Wuhan Steel confirmed the purchase in a separate statement. Neither disclosed deal terms.

China’s steel companies are expanding abroad as its growing car and construction industries boost demand for materials. Hebei Iron & Steel Group said it would buy a stake in Canada’s Alderon Iron Ore Corp. (ADV) in April, while Shanghai-based Baosteel Group Corp. agreed to extend cooperation with Australia’s Fortescue Metals Group Ltd. (FMG) in June.

The ThyssenKrupp agreement “underlines the strategy of the Chinese to get to know processes and work flows to acquire knowledge of high-quality processes,” Ingo Schmidt, an analyst at Hamburger Sparkasse AG, said today by telephone from Hamburg.

The tailored blanks unit, based in Duisburg, Germany, reported sales of about 700 million euros ($906 million) in the last fiscal year and has a market share of about 40 percent, according to ThyssenKrupp.

Asset Sales

Germany’s biggest steelmaker is divesting assets contributing about a quarter of annual revenue to reduce debt and fund growth. With today’s deal, still subject to regulatory approval, it’s signed or closed about 95 percent of the disposal program announced in May 2011.

“It’s remarkable how the management board is executing its agenda,” Christian Obst, an analyst at Baader Bank AG (BWB), said by phone from Munich. “That confirms its clear strategy to make the group leaner and to shift the focus to capital goods.”

ThyssenKrupp closed up 0.8 percent at 16.54 euros for the second-best performance on Germany’s benchmark index. Wuhan Steel rose 0.8 percent in Shanghai.

Two calls to the Wuhan, Hebei province-based company’s general line after normal working hours weren’t answered.

To contact the reporter on this story: Tino Andresen in Dusseldorf at tandresen1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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