The industrial and technology group thyssenkrupp AG (Essen, Germany; www.thyssenkrupp.com) has reached agreement with Ternium on the sale of the CSA Siderúrgica do Atlântico (CSA) steel plant in Brazil. The purchase price (enterprise value) is €1.5 billion.
“With the sale of CSA we are parting fully with Steel Americas. This is an important milestone in the transformation of thyssenkrupp into a strong industrial group,” says Dr. Heinrich Hiesinger, CEO of thyssenkrupp AG. “We now generate over 75 percent of our sales with our profitable capital goods and services businesses.”
With the closing of the transaction thyssenkrupp will receive a clear cash inflow which will significantly reduce the Group’s net financial debt. Although a writedown of around €0.9 billion on CSA will be necessary with the signing, the Group’s gearing, i.e. the ratio of net financial debt to equity, will improve on completion of the transaction. The sale is subject to the approval of the competition authorities. The two parties aim to close the transaction by September 30, 2017.
Ternium is a leading Latin American steel producer with production facilities in Mexico, Argentina, Colombia, the southern United States and Guatemala. With shipments of 9.8 million metric tons of finished steel products, Ternium purchased approximately 3.7 million tons of steel slabs from third parties in 2016. With the purchase of CSA, Ternium will acquire additional production capacities of up to 5 million metric tons of slabs per year. Under a slab supply contract agreed up to 2019, CSA will continue to deliver an annual 2 million tons to the ArcelorMittal/Nippon Steel plant in the USA.
The sale of CSA will take economic effect retrospectively at September 30, 2016. Until the closing of the transaction thyssenkrupp’s Steel Americas business area will be reported as a discontinued operation.
The sale will have corresponding effects on the Group’s net income. Beyond this thyssenkrupp does not expect the transaction to have any impact on the adjusted EBIT and free cash flow before M&A targets of its continuing operations for the current fiscal year 2016/2017.