Feb. 1 (Bloomberg) -- Outokumpu Oyj’s purchase of ThyssenKrupp AG’s stainless steel unit will establish the world’s leading producer of the alloy with 11.8 billion euros ($15.5 billion) in projected sales, the companies said.
The combination of Outokumpu with Inoxum will create a business with 14 percent market share and delivery volumes of 3.5 million metric tons, Outokumpu Chief Executive Officer Mika Seitovirta said today. It will have 19,000 employees.
The deal is “transformational for Outokumpu” as it strengthens the company financially, broadens its customer base and gives it access to a global distribution network, Seitovirta said at a news conference with ThyssenKrupp Chief Executive Officer Heinrich Hiesinger in Dusseldorf, Germany.
Outokumpu will cut 1,500 positions globally and reduce production overcapacities as it seeks to unlock cost synergies of between 225 million euros and 250 million euros a year by 2017. The new company targets rising sales in Asia, the fastest- growing stainless steel market, shifting a focus that has been “too Eurocentric,” Seitovirta said.
The companies expect the transaction to conclude by year- end. Outokumpu is “confident” it will get antitrust approval from European authorities for the deal that values the German company at about 2.7 billion euros, Seitovirta said.
Outokumpu, which today reported its fourth consecutive loss and said it won’t pay out a dividend for the first year since at least 1992, slumped as much as 14 percent in Helsinki. It traded down 6.7 percent at 5.85 euros as of 1:27 p.m. local time.
ThyssenKrupp rose as much as 2.8 percent in Frankfurt to 22.28 euros a share.
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