Finland’s Outokumpu says bids for Italian plant Acciai Speciali Terni unsatisfactory

Finnish stainless steel maker Outokumpu Oyj today said that is has so far received unsatisfactory bids  for its Italian plant, Acciai Speciali Terni (AST), which is valued at less than $740 million.

AST plant was last year valued at around $1 billion, but it could sell at less than $740 million due to the economic turmoil in Europe that has seen demand for steel plunging.

Outokumpu has been given a May deadline by the European Commission (EC) to sell AST in order to obtain approval of its acquisition of Inoxum, the stainless steel unit of German steelmaker ThyssenKrupp. (See: ThyssenKrupp to sell Inoxum stainless steel to Finland's Outokumpu for $3.55 bn)

Outokumpu said in a statement that it continues to pursue the divestment of AST despite a challenging environment for the European stainless industry.

Clarifying its disinvestment process, Outokumpu said that it has obtained an extension from the EC and the'' conditions of the bids Outokumpu has received so far for the remedy assets have not been satisfactory.''

It said that while AST's day-to-day operations are not controlled by Outokumpu, the EC  has imposed certain safeguards in running the business in order to ensure that AST's financial results and ability to continue doing business will not be adversely impacted by the on-going divestment process.

But getting a fair price at current market conditions will be far fetched as European stainless-steel producers have struggled with higher raw-material costs as prices of the metal decline.

European stainless-steel prices have dropped 13 per cent in the past year, according to Metal Bulletin data, while prices for nickel, a key raw material in stainless steel production, has risen 12 per cent on the London Metal Exchange over the same period.