Germany’s ThyssenKrupp will increase its capital by 10 per cent in a sale of new shares to bolster its balance sheet ahead of a planned deal with India's Tata Steel.
Last week, the two firms agreed to combine their European steel operations in a move to create the continent’s second-largest steel company with revenues of about 15 billion euros ($18 billion).
Thyssenkrupp plans to issue 56,593,794 new no-par-value bearer shares to obtain “the financial leeway to support organic growth” in its industrial goods business, the firm said on Monday.
At Monday's closing price of 24.7 euros, such a share sale would raise around 1.4 billion euros. With new joint venture ThyssenKrupp Tata Steel not expected to start operations until late 2018, it would take “some time” for the positive effects of the transaction to filter through, Chief Executive Officer Heinrich Hiesinger said.
“We will use that time to strengthen our industrial goods businesses right away,” the Hiesinger said.