Outokumpu Bid for Inoxum Unit Set to Win EU Approval
Outokumpu Oyj (OUT1V)’s bid for ThyssenKrupp AG (TKA)’s Inoxum unit may win European Union approval as soon as next week following an agreement to sell an Italian steel mill, according to two people familiar with the regulator’s preliminary decision.
The European Commission’s proposal to approve the deal with the company’s commitments was accepted by national competition authorities last week, said one of the people. This may allow regulators to approve it at a Nov. 7 meeting, said the people, who asked not to be identified because the merger authorization process isn’t public.
The 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 sent an antitrust complaint listing possible competition concerns with the deal in August. It previously cited worries that the transaction would shrink to three the number of producers of stainless steel flat products in Europe.
Outokumpu will add to concessions it made to the European Commission earlier this month after regulators said it must offer the plant’s buyer the option of purchasing a bright- annealing-production line at the plant in Terni, said Saara Tahvanainen, a spokeswoman for the Espoo, Finland-based company. She declined to comment on whether the deal would be approved.
“The EU specified their demands and said that it must be included in the proposal as a buyer’s option,” Tahvanainen said in a telephone interview. “If the buyer doesn’t want it, Outokumpu will keep it.”
ThyssenKrupp expects to complete the transaction by the end of the year, said Peter Sauer, a spokesman for the company in Essen. He declined to comment further. Antoine Colombani, a spokesman for the European Commission, declined to comment.
Outokumpu shares rose as much as 1 percent in Helsinki on headlines saying the Inoxum deal was set for EU approval. The shares later declined 1.4 percent to 65 euro cents.
Outokumpu offered to sell Inoxum’s Terni plant and several European service centers “to ensure the approval” of the transaction, it said Oct. 9. The pledge excludes a tubular steel unit in Italy and replaces an earlier commitment to sell Swedish stainless steel units.
Mika Seitovirta, Outokumpu’s chief executive officer, said last week the company has six months to sell the plant before the EU can step in and appoint a trustee to manage the divestment.
“Our firm intention is to keep the pencil in our own hands here and make the divestment happen during the first six months,” he said in an Oct. 24 earnings call.
Outokumpu has said the Inoxum purchase, which it plans to finalize by the end of the year, will result in annual cost savings of 200 million euros. ThyssenKrupp would retain a 29.9 percent stake in the business, receive 1 billion euros in cash, and transfer 422 million euros of Inoxum’s liabilities to Outokumpu.
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