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(Bloomberg) — Emirates Steel Arkan said it continuously evaluates options to expand its business after people familiar with the matter said earlier this week the Abu Dhabi state-backed group is pursuing a potential investment in Thyssenkrupp AG’s massive steel unit.
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“We have an ambitious growth strategy to capture the emerging opportunities in sustainable, low-emission steel products over the next 5 to 10 years, which we will explore with various partners,” the Mideast firm said in a statement Friday, without mentioning specific names.
Bloomberg News reported on April 26 that Emirates Steel Arkan is emerging as the most serious contender to buy a stake in the Thyssenkrupp business and could make a formal bid in the coming months, according to people familiar who asked not to be identified because the information is private.
One option being discussed envisions Emirates Steel Arkan taking a minority stake in Thyssenkrupp Steel as part of a business partnership, some of the people said at the time. The Middle Eastern company would produce energy-intensive products in the United Arab Emirates using renewable power before shipping them to Germany, where Thyssenkrupp could shape them into finished products for the automotive industry, according to those people.
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“We are aware of the media reports that have been published in the last 48 hours,” Emirates Steel Arkan said. “However, the relevant discussions are at a very preliminary stage and no terms in respect of any potential transaction have been reached.”
Thyssenkrupp shares are up around 12% this year, valuing the company at about $4.4 billion. The firm’s European steel unit reported revenue of about $13 billion last year — roughly a quarter of the company’s overall sales.
India’s JSW Steel Ltd. and buyout firm CVC Capital Partners have also expressed interest in the Thyssenkrupp steel unit in recent months, though discussions with those suitors aren’t currently as active, people familiar with the matter said earlier this week.
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Chief Executive Officer-designate Miguel Ángel López Borrego is inheriting the job of turning around Thyssenkrupp, with the tricky task of offloading the steel business set to be the most pressing when he starts on June 1. He faces many of the same hurdles as predecessor Martina Merz, who struggled to overcome pushback from unions, sizable pension liabilities and volatile earnings. Past attempts to merge the unit with a rival have also failed over disagreements on valuation as well as antitrust concerns.
Read More: Thyssenkrupp Slumps as CEO Quits Amid Slow Restructuring
The United Arab Emirates created Emirates Steel Arkan, the country’s biggest steel and building materials company, in 2021 when sovereign wealth fund ADQ combined Emirates Steel Industries PJSC with Arkan Building Materials Co.
The company has supplied big-name construction projects including Dubai’s Burj Khalifa, the tallest building in the world, and Emirates Palace, according to its website.
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