UAE company backs out of German steel producer deal

UAE-based Emirates Steel Arkan has walked away from a potential investment in Thyssenkrupp’s steel business, a source familiar with the matter told Reuters.

The state-backed firm stopped actively pursuing a deal due to concerns over pension liabilities and other complexities of the business, the source said.

Emirates Steel was considering buying a stake in the Thyssenkrupp unit, which has seen interest from other bidders including India’s JSW Steel Ltd also wane, the source added.

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A spokesperson for Thyssenkrupp declined to comment. Bloomberg was first to report the news on Thursday.

The German conglomerate is exploring various options for its steel division, which management sees as a drag on performance due to its cyclical nature.

Previous efforts to merge the division with a peer, sell it to a rival, list it or spin it off have all failed.

In February Emirates Steel Arkan, formed after the merger of Emirates Steel and Arkan Building Materials, in 2021, reported a Q4 2022 net profit of AED125 million ($34 million), while revenue reached AED2.3 billion.

The company made a net profit of AED508.45 million for 2022.

In August 2022, Emirates Steel Arkan was considering expanding into new markets in Asia and Africa, CEO Saeed Ghumran Al Remeithi told state-run WAM news agency.