January 24, 2020 / 4:34 PM / a month ago

Thyssenkrupp to kick off auction for plant building unit: sources

FRANKFURT (Reuters) - Ailing German conglomerate Thyssenkrupp (TKAG.DE) is planning to kick off the auction for its plant-building unit soon, two people familiar with the matter said, adding the business is unlikely to fetch sizeable offers.

FILE PHOTO: Thyssenkrupp's logo is seen outside the elevator test tower in Rottweil, Germany, January 21, 2020. REUTERS/Michaela Rehle

First information packages on Plant Technology (PT), which builds cement, fertiliser and chemical plants, could be sent out as soon as next week or in February, the people said, adding the unit may end up being sold off in parts to several buyers.

PT, which has emerged from Thyssenkrupp’s Industrial Solutions segment, made sales of 2.9 billion euros ($3.2 billion) last year and an adjusted loss before interest and tax of 145 million in the 2018/19 fiscal year.

It employs 11,419 staff and has an order backlog of 4.85 billion euros. In the current fiscal year, sales are expected to grow significantly while operating losses are seen narrowing, Thyssenkrupp has said.

The conglomerate, which is in the process of divesting or listing its elevator division, said in November it was looking to develop PT “together with partners or under a new roof”.

“You won’t see a big price tag. It’s really about ending the pain,” one of the sources said.

Companies such as Sinoma (600970.SS) and China National Machinery Industry Corp (Sinomach) [CNMAC.UL], Sweden’s Sandvik (SAND.ST) and Denmark’s FLSmidth (FLS.CO) are expected to look at the asset, the people said.

Rivals also include Saipem (SPMI.MI) and Maire Tecnimont (MTCM.MI) from Italy, U.S.-based Fluor (FLR.N), Japan’s Asahi Kasei (3407.T), Germany’s KHD Humboldt Wedag (KWGG.DE) and Metso (METSO.HE) and Outotec (OTE1V.HE) from Finland.

The sales process, managed by Citi (C.N), could result in rivals buying a minority stake in the unit, the sources said, adding that such a scenario would avoid writedowns Thyssenkrupp might have to book in case of a full divestment.

Thyssenkrupp, FLSmidth, Citi and Sandvik all declined to comment. Sinoma and Sinomach were not immediately available for comment.

Editing by Thomas Seythal and Louise Heavens

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