ThyssenKrupp $14 billion sale plan flags consolidation FRANKFURT (Global Markets) - ThyssenKrupp (TKAG.DE) shares jumped on Friday after the German steelmaker unveiled a 10 billion euro ($14 billion) divestment plan that could spur consolidation in Europe's overcrowded stainless steel sector.Stock Market Predictions
The restructuring will include a spin-off of the company's stainless steel division and aims to help ThyssenKrupp pay down debt and focus on its engineering business.
Analysts had expected a shake-up since the company's new Chief Executive Heinrich Hiesinger took over early this year.
But the scope of the revamp was more far-reaching than anticipated by the market.
"More surprising is the considered spin-off of Stainless Global, opening up strategic partnerships with former ArcelorMittal stainless unit Aperam or Finland-based Outokumpu," Equinet analyst Stefan Freudenreich said.
ThyssenKrupp shares jumped 7.1 percent to 31.955 euros by 0908 GMT, outpacing a 0.5 percent gain by Germany's DAX index .GDAXI.
ThyssenKrupp's stainless business is Europe's biggest with almost 3 million tonnes of output and annual sales of 5.9 billion euros. The company will examine all options for continuing the business outside the group.
"The main target is clearly to bring down debt levels," DZ Bank analyst Dirk Schlamp said.
Analysts have previously called for divestments at ThyssenKrupp, a lumbering giant that has piled up debts of 5.8 billion euros related to mammoth plants it has built in the United States and Brazil.
Analysts expect Hiesinger -- the company's first CEO who has no steel background -- to strengthen the non-steel sectors, including elevators and other technology-related activities, whose strong performance has offset start-up losses at its Steel Americas division.
Analysts estimate that the non-steel activities, which they see contributing around 70 percent to group's total value, were main growth drivers in the fiscal second quarter to end-March, along with European carbon steel operations and the global stainless business.
ThyssenKrupp is due to report quarterly results on May 13 and is expected to show its second-quarter earnings were boosted by higher steel prices and a booming German automotive industry.
OVERCAPACITY IN STAINLESS
Europe's stainless steel sector has long suffered from overcapacity and volatility. ThyssenKrupp and its rivals sounded out possible consolidation in the sector in 2009, but Germany's biggest steelmaker opted for a stand-alone strategy.
It then launched a restructuring that included a shutdown of one of its German stainless factories last year and brought forward production plans of a new stainless plant in Alabama.
Analysts have said a natural partner for ThyssenKrupp could be Outokumpu (OUT1V.HE) because the Finnish rival has a strong presence in northern Europe and the German firm is absent there.
They also have said the German company would have a clash of culture with ArcelorMittal, while No.1 stainless steel producer Acerinox (ACX.MC) is not keen to acquire assets in Europe.
This year, global steel market leader ArcelorMittal (ISPA.AS) spun off its stainless steel division, Aperam (APAM.AS) and listed it on the stock exchange, prompting speculation about possible consolidation.
Aperam will kick off a raft of steel-industry earnings next week, reporting quarterly results on Tuesday. ArcelorMittal itself follows on Wednesday, Germany's second-biggest steelmaker Salzgitter (SZGG.DE) on Thursday and ThyssenKrupp on Friday.
(Editing by Dan Lalor and Jane Merriman)
($1=0.7158 euros)
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