February 22, 2017 / 1:33 AM / a year ago

UPDATE 4-Thyssenkrupp ends costly Americas venture with CSA sale to Ternium

* Ternium to pay $1.3 bln for Thyssenkrupp’s CSA mill

* Deal puts CSA’s enterprise value near 1.5 bln euros

* Books 900 mln-euro writedown related to sale of CSA

* Deal marks tough Thyssenkrupp’s Steel Americas exit

* Vale, former CSA partner, fails to receive earn-out (Adds details on Vale earn-out clause in last two paragraphs, updates share price)

By Guillermo Parra-Bernal and Matthias Inverardi

SAO PAULO/ESSEN, Feb 22 (Reuters) - Thyssenkrupp AG has struck a deal to sell money-losing Brazilian steel mill CSA Cia Siderúrgica do Atlántico SA to Ternium SA for 1.26 billion euros ($1.3 billion), ending a foray into the Americas that led to years of massive losses.

Including debt, the deal gives CSA, the largest foreign investment project ever in Brazil, an enterprise value of 1.5 billion euros. The sale will lead Thyssenkrupp to book a 900 million-euro writedown, which should push the German company into a net loss this financial year.

Even as the sale came in at a much lower price than the $3 billion initially expected by analysts, it helped Thyssenkrupp exit steelmaking in the Americas - which once comprised CSA and an Alabama plant that was sold in 2014, and that added up to 8 billion euros over the years.

Thyssenkrupp Chief Financial Officer Guido Kerkhoff called the deal “clearly a positive signal” for talks between the German group and India’s Tata Steel Ltd over a possible merger of their European steel units. Thyssenkrupp’s net debt should shrink when the sale is completed by the end of the third quarter.

Reuters reported in October that ThyssenKrupp and Ternium, a steelmaker in the Italian-Argentine Techint Group of industrial companies, were in advanced talks.

“With the disposal, an important milestone in the transformation of the company can be reached and the very negative chapter ‘Steel Americas’ can be closed, which should outweigh the negative equity aspect,” DZ Bank analyst Dirk Schlamp said in a client note.


The news pushed Thyssenkrupp’s stock up 4.6 percent. It was among the top gainers of the STOXX Europe 600 index and Germany’s blue-chips on Wednesday.

At the start of the decade, Thyssenkrupp decided to shift its focus from steelmaking to concentrate on more profitable businesses such as elevators, submarines and car parts and to expand in Europe. The sale of CSA shrinks the proportion of sales generated from steel to less than 25 percent.

In a statement, Ternium Chief Executive Officer Daniel Novegil said the additional slab production from CSA, located in Santa Cruz in Rio de Janeiro state, would generate “new integration opportunities” with existing units in Mexico and Argentina.

Analysts also said the sale would reduce the company’s exposure to foreign exchange fluctuations as well as possible risks from U.S. President Donald Trump’s “America First” promise, which could imply border taxes on imports.

Late last year, Thyssenkrupp took full control of CSA after Vale SA, the Brazilian mining company that is the world’s No. 1 iron ore producer, exited the company for a token sum.

Vale failed to obtain an earn-out payment because the CSA price tag came in below a previously stipulated threshold for the payment, the German company told Reuters in a statement on Wednesday.

$1 = 0.9522 euros Additional reporting by Tatiana Bautzer in São Paulo and Maria Sheahan in Frankfurt; Editing by Mark Potter and Richard Chang

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