(Bloomberg) -- Beleaguered German steelmaker Salzgitter AG posted a record gain after a major shareholder said it’s planning a takeover offer.
Industrial conglomerate GP Günter Papenburg Aktiengesellschaft is working with TSR Recycling GmbH & Co. KG on plans to submit a takeover bid if it can acquire more than 45% of the company’s stock, Salzgitter said Monday in a statement. GP Günter Papenburg AG had a 25% stake at the end of last year, according to data compiled by Bloomberg, making it the steelmaker’s second-largest investor.
Salzgitter said the price of any potential offer hasn’t been mentioned. Prior to Monday evening’s announcement, its shares had slumped 46% over the preceding 12 months. Germany’s industrial downturn combined with a flood of cheap Chinese exports across global markets have depressed earnings at the 166-year-old steelmaker.
Shares of Salzgitter jumped 33% to 18.36 euros as of 11:59 a.m. in Frankfurt trading, boosting the company’s market value to 1.1 billion euros ($1.2 billion).
Salzgitter is also the largest shareholder in German copper producer Aurubis AG, with a 30% stake.
“Our calculations suggest that at the current market price, the value of its stake in Aurubis is higher than the market cap, leaving the core steel business for free,” analysts at Citigroup Inc. said in an emailed note. “While the offer price is not disclosed yet, the key moving parts of the business imply an attractive valuation case for the stock.”
Aurubis gained 6.7% on Tuesday morning, valuing the company at almost 3.6 billion euros.
--With assistance from Mark Burton.
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