By Johannes Hellstrom and Christoph Steitz
STOCKHOLM (Reuters) – Swedish steelmaker SSAB has ended talks over a possible acquisition of Dutch steel plant Tata Steel, he said on Friday, adding a new twist to the ongoing consolidation of Europe’s steel industry.
SSAB announced in November that it was in talks to buy IJmuiden, raising funding concerns among some analysts and investors at SSAB over the $ 2-3 billion deal.
“We have carefully evaluated Tata Steel IJmuiden and concluded that an acquisition would be difficult for technical reasons,” said Martin Lindqvist, Managing Director of SSAB.
“The synergies we saw in the transaction would not fully justify the costs and investments required for our desired transformation.”
The breakdown of the talks is a blow to the Indian Tata Steel, eager to sell its European assets, but multiplies the potential partners of Thyssenkrupp, whose steel division is for sale.
Shares of SSAB rose 7.7%, while shares of Tata Steel fell 3.6%. Thyssenkrupp shares gained 0.8%.
“IJmuiden asset buyback talks have been a concern for the market due to the lack of obvious synergies,” Credit Suisse said in a note on SSAB.
SSAB, which also reported beating expectations in the fourth quarter, has attracted investors in recent years with its green steel business Hybrit, and investors feared that a deal with Tata might not be consistent with that strategy.
When asked if future M&A opportunities include Thyssenkrupp, Lindqvist said, “We prioritize manufacturing fossil-free steel and all the possibilities we see for a company like SSAB.”
Tata Steel, which moved closer to a joint venture with Thyssenkrupp in 2019, said it remains committed to a strategic solution for its European assets, including the Port Talbot steel plant in Wales.
Its European works council has said it does not expect merger talks with Thyssenkrupp to resume.
($ 1 = 0.8264 euros)
(Edited by Shri Navaratnam, Sherry Jacob-Phillips, David Goodman and Jan Harvey)