ThyssenKrupp’s litany of failed talks

ThyssenKrupp of Germany and Arcelor of Luxembourg had protracted talks last year about a €20bn ($27bn) merger that would have united their businesses and created the world’s biggest steelmaker.

The negotiations were initiated by the German company but were seized on by Arcelor as part of its defence mechanism against the ultimately successful takeover approach by Mittal Steel, owned by Lakshmi Mittal, the Indian steel tycoon.

News of the talks, confirmed to the FT by two people involved in them, underlines the continuing pressure on the sprawling German industrial group to seal a big international deal.

“The stakes are getting higher and higher around ThyssenKrupp. The anxiety is really rising,” said a banker who has worked with the company.

The banker said ThyssenKrupp felt it had missed big opportunities after discussions involving putative mergers with the French steelmaker Usinor and the Anglo-Dutch steel producer Corus foundered this decade.

After Usinor rejected the link with the German group, it agreed in 2001 to merge with two other European steelmakers to form Arcelor, which was bought by Mittal Steel in June last year for €26.9bn after a long takeover battle. Corus agreed two months ago to be bought by Tata Steel of India for £6.7bn ($13.1bn).

“The Indians have shown [ThyssenKrupp] how it is done and the worry is that they are being left behind,” the banker said. Thyssen-Krupp declined to comment.

ThyssenKrupp recently suffered another setback after it lost a court battle to force Arcelor Mittal – the world’s biggest steelmaker – to sell it Dofasco, a Canadian steelmaker that could have become the focus of a new large steel operation in North America.

A central part of the mooted Arcelor tie-up would have been to split Thyssen-Krupp’s steel division from the rest of the conglomerate, which has shipping, elevator and car parts activities.

One person close to ThyssenKrupp said the group’s internal discussions had gone so far as to include looking at buying Anglo American, the London-based mining group.

In 2004, ThyssenKrupp said it was keen on the idea of merging its steel business with one of a number of steel rivals in Europe including Corus, Salzgitter of Germany, the Austrian Voestalpine and Italy’s Riva, only for all four groups to reject the proposals.

In the talks last year, the chairman, Ekkehard Schulz, was keen to project a link with Arcelor as a way to create a pan-European champion that would bring to fruition his interest in uniting the big steel enterprises of France and Germany.

“Schulz was disappointed he had never been able to bring off the combination with Usinor and felt it was time to do something,” said a person close to the talks.

Talks petered out by about April, after ThyssenKrupp realised it was unlikely to be able to raise sufficient cash for an agreed takeover.

Also it felt it could not risk the humiliation of losing a protracted fight for Arcelor which Mr Mittal would be the more likely to win.

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