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(Corrects first paragraph to say Aperam is Luxembourg-based, not Italian)
* At least five private equity firms interested
* Unions reject financial investor option, fear job cuts
* EC unlikely to accept sale to Aperam-sources
By Silvia Antonioli
LONDON, Dec 14 (Reuters) - Luxembourg-based stainless steel maker Aperam is interested in buying the ThyssenKrupp Acciai Speciali Terni plant in Italy, the company said, joining what sources said was a list of possible bidders.
Others interested in the plant, put up for sale by Finnish stainless steel maker Outokumpu to gain regulatory approval for another deal, include JP Morgan's private equity arm One Equity and Italian steelmaking group Arvedi, industry sources said.
JP Morgan's buyout arm is one of at least five private equity firms who have showed interest in buying the plant, but Italian unions worry that selling the Terni site to a financial investor will lead to production cuts and job losses.
Outokumpu has committed to sell the Italian mill by May 7 to gain approval for the acquisition of ThyssenKrupp's Inoxum.
"The plant has to be sold within six months so I think a private equity buyer is a more likely option. There seems to be more interest from financial investors than from steelmakers," an industry source said.
"There are many private equities for which a 500 million euros ($646 million) acquisition is not very big, so some of them are interested."
The Terni site was valued by one analyst at up to $1 billion about a year ago, but it has lost some of its value due to a deterioration of economic and market conditions in Europe, some market players said.
The sale of Italy's biggest stainless steel plant comes at a sensitive time for the country, as its two largest carbon steel producers, Ilva and Lucchini, are under threat of closure, putting at risk up to 30,000 direct and indirect jobs.
The ThyssenKrupp site employees almost 4,000 people directly and indirectly and makes up for about 20 percent of the GDP of Umbria, one of the Italian regions worst affected by rising unemployment.
An Outokumpu spokesman said the company had been approached by a number of interested parties and it is confident it will be able to sell the mill within the six month period.
A source, however, said the Finnish producer might ask the European Commission (EC) for an extension of the period.
ArcelorMittal's stainless steel arm Aperam, Europe's fourth-largest stainless steel producer after Inoxum-Outokumpu and Acerinox, said it was looking at the plant, though sources doubted the EC would allow such a tie-up as potentially anticompetitive.
"We will consider this opportunity if it makes sense for the company from an industrial point of view, but we are cautious given our conservative financial strategy," an Aperam spokesman said.
JP Morgan and Italian steelmaker Arvedi declined comment.
Despite reassurances from Outokumpu, Italian unions worry that the Finnish firm might split up the plant to facilitate the sale and keep the profitable tubemaking unit, whose main customer, French exhaust pipe maker Faurecia, supplies carmakers including Italy's Fiat.
"The tubemaking plant produces 30 percent of the site's total output; if Outokumpu keeps it for itself it will make it impossible for a buyer to become a competitive fourth player in the European stainless steel sector," the Terni secretary of union Fim Cisl Celestino Tasso said.
"We also don't want a financial investor as they tend to split up assets, rationalize and then sell them again in pieces within a few years for quick returns."
Even for an industrial buyer, though, cuts might be necessary to secure the success of the site, according to some industry experts.
"Whoever buys Terni, unless it is the Italian state, will cut production and jobs," one said.
"The overcapacity in the European steel market has to be fixed and Terni has to make its contribution. The union should focus on this and understand that, in this climate, if they can keep 3,500 out 4,000 jobs, it is OK."
The structural overcapacity of stainless steel in Europe has meant most producers have made losses in recent years, creating a need for rationalisation and consolidation, which in turn triggered Outokumpu's acquisition of Inoxum. ($1 = 0.7736 euro) (Editing by David Holmes and Anthony Barker)