Outokumpu Oyj’s bid for ThyssenKrupp AG’s Inoxum unit won European Union approval after it agreed to sell an Italian steel mill.
Outokumpu’s offer to sell Inoxum’s stainless steel production facility at Terni and several European service centers alleviates concerns the deal might allow the companies raise prices of cold-rolled steel products, the Brussels-based European Commission said in an e-mailed statement today.
“The divestment of the Italian Terni plant ensures that the creation of a new European market leader will not be detrimental for consumers and businesses in Europe,” EU Competition Commissioner Joaquin Almunia said in the statement.
The Espoo, Finland-based steelmaker agreed to buy Inoxum on Jan. 31 in a deal valuing the German unit at about 2.7 billion euros ($3.5 billion.) The EU conditions also include an option for the plant’s buyer to purchase Terni’s forge and a bright-annealing production line.
Outokumpu will finalize the deal by the end of 2012 and had six months to make the planned divestments, the company said in a statement. Mika Seitovirta, the company’s chief executive officer, said the transaction would generate yearly savings of around 200 million euros.
“New Outokumpu can achieve significantly improved capacity-utilization rates, we will have an expanded presence in growth markets outside Europe and the widest product offering to serve our customers even better,” Seitovirta said.
Outokumpu rose to its highest in a month, trading up 6.1 percent to 0.78 euros at 1:38 p.m. in Helsinki.
Heinrich Hiesinger, ThyssenKrupp’s CEO, said in a statement that the sale of Inoxum was an important step in his company’s strategy to be a diversified industrial group and reduced its net debt.
Hiesinger plans to transform the company by building up its technologies division. He is cutting ThyssenKrupp’s divisions from eight to five by selling Inoxum, Steel Americas and combining its Plant Technology and Marine Systems businesses into a unit called Industrial Solutions.