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Thyssen’s VDM attracts interest from Aperam, PE, say sources-Reuters

(Reuters) – German steelmaker ThyssenKrupp has attracted interest from buyout groups and peer Aperam for its high-performance alloy unit VDM as it tries to shed unwanted assets from a complex deal, sources said.

Aperam and buyout groups Gores Group and Lindsay Goldberg are expected to hand in bids for VDM by early next week, two people familiar with the matter said on Thursday, although there is no structured sales process and a months-long market test may continue.

ThyssenKrupp bought back VDM and stainless steel unit AST from Outokumpu last year after selling them to the Finnish steelmaker as part of a bigger deal. VDM and AST together have a book value of over 900 million euros ($950 million).

The two units are making operating losses while they are being restructured but ThyssenKrupp estimates VDM can in the medium term regain its historical core earnings level of 80-100 million euros annually.

VDM’s core earnings dropped to 40 million last year, several sources familiar with the company said. ThyssenKrupp only reports profit before interest and taxes for the units.

ThyssenKrupp and Lindsay Goldberg declined to comment, as did Deutsche Bank, which is managing the sale. The Gores Group and Aperam did not immediately respond to requests for comment.

Private equity group Gores is working with former steel executive Benedikt Niemeyer, three sources familiar with the matter said.
Investor Lindsay Goldberg, founded by former Thyssen executive Dieter Vogel, remains in the running, one of the people said.

The sources stressed that while no structured divestment process was under way and no hard deadline had been set, Thyssen had asked for clear feedback. “Thyssen is not under any obligation to do anything,” one source said.

Aperam may be best placed to draw synergies from merging VDM with its own operations and keep ties with Thyssen.

“Weakly capitalised Thyssen wants to avoid writedowns on the book value. Aperam could agree to pay a high headline price but then negotiate favourable supply contracts,” one of the sources said.

ThyssenKrupp and Outokumpu, like other steelmakers in Europe, have faced weak demand as construction and metal engineering customers have held back purchases while oversupply and cheap imports have depressed prices.

VDM has about 2,000 employees and offers metal products such as nickel alloys, titanium alloys or special stainless steels used in highly corrosive environments such as in chemicals processing and the oil and gas sector.