Swedish SSAB refuses to buy Dutch Tata Steel

Swedish steelmaker SSAB has completed negotiations on a potential acquisition of Dutch steelmaker Tata Steel, said Friday, adding a new twist to the ongoing consolidation of the European steel sector.
In November, SSAB announced that it was in talks to buy IJmuiden, prompting funding concerns from some SSAB analysts and investors over the $ 2-3 billion deal.

“We have carefully evaluated Tata Steel IJmuiden and concluded that the acquisition would be difficult for technical reasons,” said SSAB CEO Martin Lindqvist.

“The synergies we saw in the deal would not fully justify the costs and investment required for our desired transformation.”

The breakdown in negotiations is hitting India's Tata Steel, which has sought to sell its European assets, but is increasing the number of potential partners for Thyssenkrupp, whose steel division is up for sale.

SSAB shares rose 7.7% and Tata Steel fell 3.6%. Thyssenkrupp shares added 0.8%.

“Negotiations to take over the IJmuiden asset have raised concerns in the market due to a lack of obvious synergies,” Credit Suisse said in a statement on SSAB.

SSAB, which also posted stronger-than-expected fourth-quarter results, has attracted investors with its green steel venture Hybrit in recent years, and investors feared the Tata deal might not be in line with that strategy.

Asked if future M&A opportunities for Thyssenkrupp include, Lindqvist replied, "We prioritize non-fossil steel production and all the opportunities we see for a company like SSAB."

Tata Steel, which came close to establishing a joint venture with Thyssenkrupp in 2019, said it remains committed to a strategic decision for its European assets, including the Port Talbot steel mill in Wales.

The company's European Works Council said it did not expect merger talks with Thyssenkrupp to resume.