BERLIN (Reuters) - Thyssenkrupp AG (TKAG.DE) raised almost 1.4 billion euros (1.23 billion pounds) from institutional investors on Monday in a share sale to bolster its balance sheet ahead of a planned merger with India’s Tata Steel (TISC.NS).
The two firms agreed last week to combine their European steel operations in a move to create the continent’s second-largest steelmaker with revenues of about 15 billion euros.
Thyssenkrupp issued 56,593,794 new no-par-value bearer shares to obtain “the financial leeway to support organic growth” in its industrial goods business, the Essen, Germany-based steelmaker said.
At a price of 24.3 euros, below Monday’s closing price of 24.7 euros, the share sale raised 1.38 billion euros, the company said.
With the new Thyssenkrupp-Tata Steel joint venture not expected to start operations until late 2018, it will take “some time” for the positive effects of the transaction to filter through, Chief Executive Officer Heinrich Hiesinger said.
“We will use that time to strengthen our industrial goods businesses right away,” he said.
If approved, the new joint venture would create Europe’s second-biggest steelmaker after ArcelorMittal (MT.AS), with combined sales of about 15 billion euros.
Reporting by Andreas Cremer; Editing by Mark Potter and Tom Brown