The mining business of German conglomerate thyssenkrupp (TK) in India will not be sold to Denmark’s FLSmidth as part of the 24-nation deal, paring the value of the transaction by almost 14 per cent.
The Danish company, which is also present in India independently, had announced a 325-million-euro (Rs 2,818 crore) deal on July 29. The transaction included the sale of TK’s Indian mining business too.
FLSmidth on Monday said it would exclude the India business from the deal and accordingly, the total consideration (enterprise value) for TK Mining will be reduced by 45 million euros (Rs 390 crore) to 280 million euros (Rs 2,428 crore).
The Danish major did not categorically disclose the basis for the change but suggested that the sale of the India business was part of an ongoing “negotiation” as TK’s mining activities are part of a larger integrated entity which is not fully owned by the German conglomerate.
“Following discussions between the parties and with the minority shareholders, it has now been agreed to exclude the TK Mining activities in India from the final transaction,” FLSmidth said in a statement on Monday.
The mining activity of TK is housed in an entity called thyssenkrupp Industries India Pvt Ltd, where four Indian families have significant shareholding, even as the German company has majority stake.
Minority shareholders
Sources said the Indian minority shareholders, who came together historically over the last three to four decades, held a contra view on the proposed transaction.
The minority shareholders had nearly a 48 per cent stake, while TK had about 52 per cent.
Apart from open cast mining and bulk handling division, thyssenkrupp Industries India Pvt ltd has three other businesses — sugar plant and machinery, cement plant and machinery and energy (boilers for industry).
In 2020, TK’s mining activities had delivered a revenue of 100 million euros (Rs 860 crore), while TK Mining (excluding India) had delivered a revenue of 680 million euros (Rs 5,897 crore).
No impact
The Danish company said FLSmidth already has a strong presence in India and TK Mining’s activities in India are not strategically important for the transaction.
The exclusion of the India business will not affect the transfer of TK Mining’s key IP and technologies to FLSmidth as part of the overall transaction, it informed.
“The exclusion of TK Mining’s activities in India has no impact on the expected synergies and integration costs for the transaction. TK Mining is still expected to be net profit and cash flow positive from 2024 on a standalone basis. The EV/EBITDA normalised incl. synergies are around 3.5x post integration,” FLSmidth said in the official statement.
