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U.S. Steel may be in on bid for mills of German firm

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By Reuters
Tuesday, Feb. 12, 2013, 12:01 a.m.

Bidders competing for ThyssenKrupp AG's loss-making American and Brazilian steel mills are teaming up in an effort to make the investment more digestible, according to people familiar with the transaction.

ThyssenKrupp, Germany's biggest steelmaker, said in May that it was considering options for the mills, which lost about $1.34 billion in the financial year that ended in September, but deemed initial bids as too low. Sources said the bids were in the region of $4 billion to $5 billion.

Japan's JFE Steel Corp and U.S. Steel Corp. are planning to hand in a joint bid by a Feb. 28 deadline for final bids, two people familiar with the process said. U.S. Steel spokeswoman Courtney Boone declined to comment.

“The bidding process is running according to plan,” a spokesman for ThyssenKrupp said, without confirming the deadline for bids. “We are optimistic to find a solution by the end of the fiscal year.”

Europe's ArcelorMittal and Japan's Nippon Steel have joined forces in the auction, according to sources familiar with the process, though have not confirmed their plan, while Brazil's Cia Siderúrgica Nacional has secured financial support from state development bank BNDES.

ThyssenKrupp heavily wrote down the value of its Steel Americas unit to $5.22 billion in December. It had wanted to carve out new markets with two mills in Brazil and the United States, but they were hit by cost overruns, poor project management and weaker than expected demand.

Brazil's Vale, the world's No. 2 miner, owns a 27 percent stake in Thyssen's Brazilian plant, CSA, but has said it is not interested in buying Thyssen's stake.

Goldman Sachs and Morgan Stanley are advising Thyssen on the sale.

A downturn in the European steel market has prompted the group to shift investment to higher margin products such as elevators, plant components and submarines.

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