Salzgitter: Refusal of Takeover, Yet Maintaining Collaboration - Salzgitter: Collaboration persisted despite rejection
Salzgitter AG Rejects Takeover Bid, Vows Continued Cooperation
In a significant development, Salzgitter steel conglomerate has turned down a takeover offer from GP Günter Papenburg and TSR Recycling, two unsuccessful bidders. However, the company intends to maintain a business relationship with both, following positive interactions over the years.
At Salzgitter's annual general meeting in Wolfsburg, attended by approximately 300 shareholders, CEO Gunnar Groebler emphasized the importance of this continued cooperation. Papenburg, a major shareholder holding a significant stake of 26.7% as of November 2024, now stands as the largest individual shareholder, surpassing the state of Lower Saxony with 26.5% ownership. Reports from the meeting suggest that Papenburg's stake is close to 30%.
The takeover offer, jointly considered by Papenburg and TSR in late 2024, was dismissed as too low by the Salzgitter board in April. Despite this, extensive discussions ensued, with significant differences in perspectives on the company's current and future value emerging. The consortium had proposed 18.50 euros per Salzgitter share, while the stock was trading at around 22 euros at the time.
During the general meeting, Groebler narrowly avoided a vote of no confidence. With less than 56% of shareholders granting him discharge, a formality in most cases, all other board members secured almost unanimous discharge with over 99.9%. A representative of Papenburg had earlier requested a separate vote on the discharge of board members.
IG Metall and the state of Lower Saxony had criticized the takeover plans from the outset. Finance Minister Gerald Heere (Greens) reaffirmed at the annual general meeting that the state would continue its participation in Salzgitter AG, expressing full support for the board's ambitious green steel transformation agenda.
Salzgitter aims to produce CO2-neutral steel in the future at its Salzgitter facility. Despite initial ambitious plans, the ramp-up has been slightly delayed, with the new facility now expected to start producing green steel in 2027 due to a construction delay with the electric arc furnace.
The company aims to fully convert to green steel by 2033, gradually phasing out its three coal-fired blast furnaces in favor of facilities that will initially run on natural gas and later on green hydrogen. However, recent economic conditions and high electricity prices, combined with declining steel demand, have resulted in a net loss of nearly 350 million euros in 2024, followed by a loss of around 35 million euros in the first quarter of 2025.
In response to the weak performance, Salzgitter has intensified its ongoing cost-cutting program, aiming to save 500 million euros annually by 2028, up from the initially targeted 250 million euros per year. The company has already achieved the first 150 million euros of this target, with Groebler expressing confidence in its implementation.
Groebler is optimistic about prospects from the debt-financed investment plans of the federal government in defense and infrastructure, as well as the potential for growth in the armor steel sector for the defense industry. Traditionally, the automotive industry has been Salzgitter's largest customer.
Salzgitter AGAnnual General MeetingSteelGünter PapenburgAcquisitionGunnar GroeblerSteel ConglomerateCooperationWolfsburgLower SaxonySalzgitter
- In the future, Salzgitter AG may consider implementing vocational training programs for its employees to strengthen its workforce and maintain a competitive edge in the industry, particularly in the areas of green steel production and finance management.
- To further bolster the company's position in the steel market and ensure sustainable growth, Salzgitter AG could explore potential collaborations with vocational training institutions and businesses, leveraging the expertise of industry stakeholders for the development of innovative solutions.
