Outokumpu Oyj (OUT1V) faces an in-depth review by European Union regulators of its bid for ThyssenKrupp AG (TKA)’s Inoxum stainless steel division in a deal that would create Europe’s largest maker of the alloy.
The European Commission extended until Sept. 26 its deadline to rule on the acquisition amid competition concerns over a transaction that would leave “only three integrated producers of stainless steel flat products in Europe.”
A “preliminary investigation indicated potential serious competition concerns in various markets for the production and distribution of stainless steel flat products, where the merged entity would have very high market shares,” the Brussels-based EU authority said in an e-mailed statement today.
Outokumpu, based in Espoo, Finland, agreed to buy Inoxum on Jan. 31 in a deal valuing the German unit at about 2.7 billion euros ($3.45 billion.) The company has said the Inoxum purchase will bring “cost synergies.” ThyssenKrupp would retain a 29.9 percent stake in the business, receive 1 billion euros in cash, and transfer liabilities of 422 million euros for Inoxum to Outokumpu.
The two companies have “significant” market shares for slabs, hot rolled and cold rolled stainless steel products, the EU said.
The EU decision “was very much expected” and a prolonged review “is typical in transactions of this scale,” ThyssenKrupp said in an e-mailed statement. “As we have said all along, we expect to get an approval by the end of 2012. Nothing has changed in this respect.”
Outokumpu didn’t immediately respond to an e-mail seeking comment. It said yesterday that it expected an in-depth probe.
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