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ThyssenKrupp Will Close Railway-Equipment Unit After Ending Sale

ThyssenKrupp AG (TKA), Germany’s largest steelmaker, halted the sale of its railway and construction division after bids failed to meet expectations.

The company will close the railway-equipment part of the business because it has “no growth prospects on the German market and is under extreme cost pressure,” Essen-based ThyssenKrupp said today in a statement. That will result in the shutdown of sites and as many as 260 job losses.

In 2012 and 2013, the company and Austrian peer Voestalpine AG (VOE) were hurt by fines from Germany’s Federal Cartel Office for breaking competition rules in the railway-steel market. Both were already suffering from lower steel prices as the economic slowdown cut demand from the construction and auto industries.

“I’m not surprised” by today’s decision, Hans-Peter Wodniok, an analyst at Fairesearch GmbH & Co. KG, said by phone from Kronberg near Frankfurt. “Every potential purchaser knows how much ThyssenKrupp is standing with its back to the wall.”

The company’s construction-equipment business will continue to operate within the material services unit. Its electrical-steel unit is undergoing due diligence before a potential sale, while talks continue with potential buyers of Berco, which makes parts for earth-moving machinery, Chief Financial Officer Guido Kerkhoff told Boersen-Zeitung this month.

ThyssenKrupp fell as much as 1.1 percent to 18.78 euros in Frankfurt trading, the lowest price in a month. The stock was at 18.85 euros as of 11:33 a.m. local time.

The company had to pay 191 million euros ($265 million) after the cartel probe. In November, it agreed on compensation for state-owned rail operator Deutsche Bahn AG. Voestalpine closed its railway-equipment business in Germany last year.

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

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Amanda Jordan, John Viljoen

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