Carlyle Withdraws from Thyssenkrupp Bid

By Christoph Steitz

FRANKFURT (Reuters) – Private equity firm Carlyle has withdrawn from the bidding process for the warship division of the struggling conglomerate Thyssenkrupp (ETR:TKAG), as confirmed by the company on Tuesday.

Carlyle's exit is a serious setback for Thyssenkrupp's restructuring efforts, which include plans for a 50:50 steel joint venture with Czech billionaire Daniel Kretinsky.

Thyssenkrupp acknowledged Carlyle's withdrawal, stating in response to emailed inquiries, "We can confirm that the investment company Carlyle Group (NASDAQ:CG) has informed us that it is withdrawing from the bidding process for the investment in Thyssenkrupp's marine division."

Following the news, Thyssenkrupp's shares declined by as much as 3.7%.

The reason behind Carlyle's departure was not disclosed, but Thyssenkrupp plans to focus on spinning off the division that manufactures submarines and frigates while remaining open to industrial partnerships.

Carlyle has not provided any comments regarding its decision.

Additionally, the German economy ministry is in discussions with Thyssenkrupp about the future of its marine business but has not given further details.

In June, sources indicated that Carlyle and state lender KfW were discussing a joint acquisition of a majority stake in TKMS, which was valued at around 1.6 billion euros ($1.73 billion) at that time.

Thyssenkrupp's Chief Executive Miguel Lopez expressed confidence in August that efforts to sell TKMS, whether to a consortium or through a spin-off, would be successful in the coming months.

Thyssenkrupp continues to produce car parts and operate a significant materials trading business, while keeping in touch with the government about possible involvement in TKMS, which posted a nine-month operating profit (EBIT) of 74 million euros—a figure that rose by over two-thirds year on year.

The company stated, "We remain convinced that the naval sector can best leverage the industry's global growth opportunities by operating independently. In addition, independence offers a good starting position for potential national and European consolidation."

($1 = 0.9248 euros)