LONDON (BLOOMBERG) - Embattled steel giant Thyssenkrupp has narrowed the list of bidders for its lift unit, which is expected to fetch more than €15 billion (S$22.5 billion), people familiar with the matter said.
Asian private equity firm Hillhouse Capital has decided against a bid, while Brazilian-American investment firm 3G Capital is also out of running, the people said, asking not to be identified because the information is private. A consortium including Blackstone Group, Carlyle Group and Canada Pension Plan Investment Board (CPPIB) proceeded to the next round, as did a rival group backed by Advent International, Cinven and the Abu Dhabi Investment Authority, they said.
Brookfield Asset Management, which partnered Temasek Holdings, is also still in the running, the people said. The shortlisted investment firms will be competing with the remaining strategic suitor, Finnish lift maker Kone, which teamed up with CVC Capital Partners and has been bidding on a different timeline, the people said.
Shares of Thyssenkrupp have fallen about 25 per cent over the past year, giving the Essen-based company a market value of €7.5 billion. Hillhouse and 3G, which had been considered surprise bidders when they first entered the auction, could still try to team up with the remaining parties, the people said.
RAG-Stiftung, a state-backed foundation overseeing the cessation of hard-coal mining in Germany, is backing the bid from Advent and Cinven, one of the people said. No final decisions have been made, and details of the potential sale could change, according to the people.
Representatives for Advent, Blackstone, Brookfield, Carlyle, Cinven, CPPIB, CVC, Hillhouse, Kone, RAG-Stiftung and Thyssenkrupp declined to comment. Representatives for 3G Capital, Adia and Temasek did not immediately respond or could not immediately be reached for comment.
If one of the buyout groups prevails, a deal for the Thyssenkrupp business could become the biggest private-equity acquisition in Europe in more than five years, according to data compiled by Bloomberg. The Thyssenkrupp supervisory board is scheduled to meet ahead of the company's Jan 31 annual general meeting, the people said.
The next round of bids is expected around mid-February, according to the people.
Once a symbol of German engineering prowess, Thyssenkrupp is fighting for survival amid a deep manufacturing slump. While its steel business faces shrinking margins, the lift unit was again a glimmer of light in a November earnings statement that showed the conglomerate's cash and debt position deteriorating.
Ailing Thyssenkrupp is exploring a sale or initial public offering (IPO) of the lift operations, its most valuable unit, to raise cash to fund a turnaround at the conglomerate. It is leaning towards selling the business, though it is also still preparing for the possibility of a listing, the people said.
Initial investor feedback for a potential IPO valuation was around €15 billion when Thyssenkrupp gauged interest in December, according to the people. Select investors inidicated they might be willing to buy shares at a market capitalisation of as as much as €17 billion, the people said.
Still, listing prices are notoriously volatile, and Thyssenkrupp would likely raise less money by selling only a minority stake on the stock exchange.