The parties are in talks to sell another 30% of the division's shares to create a joint venture and each own 50% of the shares

German concern Thyssenkrupp announces that it has reached an agreement to sell 20% of its steel division to the energy holding EPCG, controlled by Czech billionaire Daniel Kretinsky. This was reported by Reuters.

For Thyssenkrupp, this deal marks a move away from the cyclical and troubled steel business, which the company has been trying to sell or spin off for a long time.

Thyssenkrupp Steel Europe is the largest steel producer in Germany. However, Asian competitors with cheaper products, high electricity prices and a stagnant global economy are putting pressure on the business. These factors have led to the company’s operating losses over the past four years.

The parties are negotiating the acquisition of another 30% stake in Thyssenkrupp Steel by EPCG. Thus, the companies will create a joint venture, controlling 50% of the shares each. The news of the upcoming merger raised Thyssenkrupp Steel shares by more than 10%.

The deal centers around the idea that steel production will require cheap and clean energy. EPCG Holding will supply 22 GW of installed capacity to Thyssenkrupp’s steel mills.

The value of the current deal was not disclosed, but the brokerage Baader said that the amount could reach €350-400 million.

EPH Group owns the Mibrag and Leag lignite plants in Germany, which are seeking to generate more climate-neutral electricity from renewable sources in the future.

Earlier, Thyssenkrupp announced plans to reduce its steel production capacity by 1.5-2 million tons to 9-9.5 million tons per year from the current 11.5 million tons per year. The reorganization of steelmaking capacity is a result of difficult market conditions. After the reduction, production volumes will be in line with the level of shipments recorded over the past three years. The company intends to focus on the production of premium steel grades and stronger materials.