ThyssenKrupp AG plunged in Frankfurt trading after the steelmaker announced plans to boost capital by as much as 10 percent of its market value and absorb money-losing businesses sold with its Inoxum unit.
The stock sank 8.5 percent, the most since August 2011, to close at 17.635 euros in Frankfurt, the second-biggest decliner in the benchmark STOXX Europe 600 Index. Five times more shares changed hands than the 90-day average.
ThyssenKrupp agreed to sell its U.S. steel plant to ArcelorMittal and Nippon Steel & Sumitomo Metal Corp. for $1.55 billion, the company said Nov. 29 after Frankfurt trading closed. Germany’s biggest steelmaker will terminate financial links with Outokumpu Oyj by swapping a loan note against all shares of the VDM and AST units and some smaller stainless-steel service centers. The units were part of the sale of its Inoxum stainless-steel business to the Finnish company last year.
ThyssenKrupp “wanted to get rid of Inoxum and now has parts of it back,” Christian Obst, an analyst at Baader Bank AG, said in a phone interview from Munich. “It’s disappointing to have three assets, including the Brazilian Steel Americas plant, that make an aggregated loss. It’s better than allowing the risks to continue.”
The company has spent the past 18 months trying to dispose of the plants in Alabama and Brazil’s Rio de Janeiro state. Steel Americas helped wipe 14 billion euros ($19 billion) off its parent’s market value since 2008 and forced it to abandon dividends.
Keeping AST, VDM, and the Brazilian plant “slows down the transition into a technology company,” said Joerg Schneider, a money manager at Union Investment, which oversees about 200 billion euros of investments, including in ThyssenKrupp. Chief Executive Officer Heinrich Hiesinger “has to face reality now. The laurels won in advance are gone. Now he has to earn back confidence.” It’s arguable whether AST and VDM are worth their book value, Schneider said by phone from Frankfurt.
“AST and the Brazil plant will reduce ThyssenKrupp’s earnings before interest and taxes by 200 million euros annually for the time being,” Ingo-Martin Schachel, an analyst at Commerzbank AG, said in a phone interview from Frankfurt. “I don’t expect a quick disposal of AST, VDM and CSA,” the Brazilian plant, he said.
Cevian Capital AB, ThyssenKrupp’s second-biggest shareholder, doesn’t rule out increasing its stake in the Essen-based company, a spokeswoman said today by phone, reiterating a previous statement.
The Krupp Foundation, ThyssenKrupp’s largest shareholder, declined to comment whether it will participate in the planned equity sale.