German steel group ThyssenKrupp is close to selling its stainless steel arm as it pushes ahead with plans to slash its debt and carve off non-core assets, according to a report by Reuters.
The tough market for stainless steel has prompted major steelmakers to reconsider their involvement in an industry that is battling with competition from Asia, overcapacity and the consequences of an economic downturn.
A ThyssenKrupp source with knowledge of the process said the debt-burdened company was likely to opt for a sale, as opposed to a spin-off or an initial public offering of the business. "A sale is more likely than the other options," said a second investment banker involved in the deal, who requested anonymity because he was not authorized to speak on the record.
The key question is who, then, would be keen to snap up Thyssen's business, renamed Inoxum last year, and valued by analysts in a range of €1-2 billion, with some excluding German operations because of ongoing restructuring there.
A private equity source with direct knowledge of the matter said ThyssenKrupp had asked a handful of private equity players to submit a bid for Inoxum but that most of those who were asked declined even before checking the books.