By Nathan Allen
Thyssenkrupp shares traded higher Thursday, extending a prolonged patch of volatility for the German conglomerate, after Reuters reported that Finnish rival Kone is considering a deal for its elevator unit.
The report of Kone's interest comes less than a week after Thyssenkrupp said it wants to spin off and list the unit, which could be valued at around 14 billion euros ($15.68 billion), abandoning previous plans to split the group in two.
Thyssenkrupp's strategic U-turn drove the stock up nearly 30% last Friday, but shares subsequently returned to trade around their prior level amid a slew of analyst downgrades, poor second-quarter results and a general selloff in equities.
Still, at 0754 GMT Thyssenkrupp had regained 3.2% to trade at EUR12.56, after climbing as high as EUR12.92 earlier in the day.
Speculation about some form of tie-up between Kone and Thyssenkrupp has circulated for several years without ever progressing to a concrete offer. German media has reported that Thyssenkrupp's largest shareholder, the Alfried Krupp Foundation, met with Kone shareholder Antti Herlin to discuss a deal as far back as 2016.
The current deliberations are also likely to prove abortive, according to Jefferies analyst Alan Spence. While a listing would provide a quick cash injection to bolster Thyssenkrupp's balance sheet and fund much-needed restructuring, a merger would likely become mired in antitrust proceedings, delaying any potential gains until at least 2021, Mr. Spence said.
Such a deal could produce significant cost savings and the two companies' portfolios are broadly complementary, despite some geographical overlap, the analyst said.
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