ThyssenKrupp AG’s last chance to offload its unprofitable Americas steel unit is a sale to Brazil’s Cia. Siderurgica Nacional SA, said Dan DiMicco, chairman of former bidder Nucor Corp.
“We’re out, U.S. Steel is out, Mittal and Nippon are out,” he said in an interview at Bloomberg’s New York office. CSN “is their only hope, and they can’t get that deal done.”
ThyssenKrupp, Germany’s biggest steelmaker, has spent more than a year trying to sell Americas plants, including to joint bidders ArcelorMittal and Nippon Steel & Sumitomo Metal Corp., as demand wanes and Chinese competition grows. The Wall Street Journal reported July 25 that discussions with CSN had failed, while ThyssenKrupp said the status of talks was unchanged.
The Brazilian company was the leading bidder, people with knowledge of the matter said in May. Sao Paulo-based CSN, U.S. Steel Corp. and ArcelorMittal declined to comment.
ThyssenKrupp fell 4.2 percent, the most in more than four months, to close at 16.35 euros in Frankfurt. CSN slumped 5.9 percent to 6.67 reais in Sao Paulo yesterday, the biggest decline since April 2. It was down 0.3 percent today.
ThyssenKrupp is in “advanced negotiations with a leading bidder on the disposal of Steel Americas,” Stefan Ettwig, a spokesman for the Essen, Germany-based company, said yesterday. “We are also in talks with other interested parties.”
The steelmaker will have to accept less than the $3 billion it was said to be seeking in May for a unit with a book value of 3.4 billion euros ($4.5 billion), DiMicco said. “If they could get a billion and a half, they’d do that deal,” he said.
The German producer posted a 3.6 billion-euro writedown of the unit in December and a further 683 million euros in May.
ThyssenKrupp owns 73 percent of a steel plant in the state of Rio de Janeiro. Vale SA, the largest iron-ore producer and a supplier to the plant, owns the rest. The German company built the facility with a capacity of 5 million metric tons a year to supply steel slabs to its mills in Alabama and Germany.
It planned to produce low-cost slabs in Brazil and sell flat carbon steel from its U.S. plant at high prices. Since then, labor costs in Brazil have increased, the currency has appreciated against the dollar and iron-ore prices rose.
“It’s a Ferrari all right, without the engine, without the wheels, without the brakes,” DiMicco, 63, the former chief executive officer of Charlotte, North Carolina-based Nucor, said of ThyssenKrupp’s U.S. steel production plant.