LONDON, Oct 22 (Reuters) – Finnish stainless steel maker Outokumpu has asked the European Commission to let it keep the Italian steel plant the company agreed to sell to gain approval for its purchase of ThyssenKrupp’s Inoxum unit.
The Acciai Speciali Terni plant has been valued at more than 500 million euros ($677 million) by Outokumpu, but is now expected to sell for less than that due to weakness in the global steel market.
Two sources familiar with the matter told Reuters that Terni, one of Europe’s biggest and most modern plants, will lose 80-100 million euros this year, and that Outokumpu believes it is not anti-competitive to keep it under current conditions.
The Terni plant, about 100 km (62 miles) north of Rome, was valued by one analyst at up to $1 billion over a year ago. “They have been trying to convince the EU that they should keep Terni since the market situation has completely changed from last year – the sector got much worse,” an industry expert said.
Refraining from selling the plant could allow more flexibility in valuing it, the expert said, leading to a lower writedown in the company’s books.
“On Outokumpu’s books they put it at 560 million but probably it will go at 100-200 million euros,” he added.
Outokumpu has twice asked the Commission, which regulates mergers, acquisitions and competition in the EU, to postpone the deadline for selling Terni because the company thought the bids were unsatisfactory.
It has now been given until the first quarter of 2014 to complete the sale, according to a source with knowledge of the situation. The request not to sell is expected to receive short shrift in Brussels.
“The successful and timely sale of AST (Terni) … is essential for the Commission. The Commission is of the view that the divestiture should occur as soon as possible within the timeframe foreseen,” said Antoine Colombani, spokesman for EU Competition Commissioner Joaquin Almunia.
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