ThyssenKrupp, Outokumpu jointly establish stainless steel business

ESPOO (Scrap Monster): ThyssenKrupp, Germany's biggest steelmaker and Outokumpu, leading Finnish stainless steel maker - have decided to combine Outokumpu with Inoxum, the stainless steel unit of ThyssenKrupp, to establish a new global stainless steel business.

Agreements to this effect have been approved on Tuesday by the Supervisory Board of ThyssenKrupp AG and the Outokumpu Board of Directors. The total consideration values Inoxum at approx. EUR 2.7 bn.

Under the agreement, ThyssenKrupp will obtain a 29.9 percent stake in the new company for its transfer of Inoxum. In addition, Outokumpu will pay EUR 1 bn in cash to repay ThyssenKrupp’s financial receivables towards Inoxum and will assume an additional EUR 422 mm of third-party financial liabilities and pension liabilities of Inoxum (as at 30/09/2011).

ThyssenKrupp will also retain financial receivables from Outokumpu worth a nominal EUR 235 mm (as at 30/09/2011).

The combination is subject to a number of conditions, including regulatory approval. As part of the transaction, Outokumpu will increase its capital. This will be subject to approval by the Outokumpu shareholders. The transaction is expected to be completed by the end of 2012.

The combination is estimated to create a new global leader in stainless steel with sales of around EUR 11.8 billion (annualized pro forma figures for the 12-month period ended 30/09/2011) and more than 19,000 employees worldwide (as of 30/09/2011).

Outokumpu is a leader in austenitic and duplex steels, which are used in the chemical and energy sectors among others. Inoxum is one of the leaders in ferritic, nickel-free steel for the automotive and white goods industries and in addition to that an important supplier of high-performance alloys, e.g. for the aircraft industry.

The combination is expected to create a company with a worldwide, cost-effective and highly competitive production network for a broad range of high-quality stainless products to meet the demands of a diverse range of customer groups.

The combined entity will operate under the name of Outokumpu, which will continue to be headquartered in Espoo, Finland, and listed on the NASDAQ OMX Helsinki Stock Exchange.