February 1, 2012 6:59 PM

Skadden Advises Outokumpu on $3.5 Billion Buy of ThyssenKrupp Stainless Steel Unit

Posted by Tom Huddleston Jr.

Finland's Outokumpu Oyj has agreed to pay $3.5 billion to acquire the stainless steel unit of German steelmaker and engineering company ThyssenKrupp AG in a deal that would create the world's largest stainless steel manufacturer, according to Reuters.

Outokumpu produces stainless steel products such as coils, wires, rods, and bars. The Espoo, Finland–based company announced Tuesday that it will acquire the ThyssenKrupp unit Inoxum for $1.3 billion in cash, while also paying a $310.2 million loan note to ThyssenKrupp and assuming $557.1 million of Inoxum's debt. ThyssenKrupp will also receive a 29.9 percent stake in the newly formed company.

Reuters notes that both Outokumpu and Inoxum have reported losses of late, as Europe's stainless steel industry loses customers to rivals in Asia, where production is cheaper. Outokumpu is betting that the acquisition will allow it to cut costs through consolidation. The company predicts some savings by 2014, and thinks that it will see as much as $330 million in annual savings by 2017. Reuters reports, however, that investors' fears over how long it will take those synergies to materialize caused Outokumpu shares to suffer a 15 percent drop in Tuesday trading.

Outokumpu turned to Skadden, Arps, Slate, Meagher & Flom as counsel on the acquisition. Skadden's team is led by cross-border M&A partner Scott Simpson in London, and antitrust partner James Venit in Brussels.

A team from White & Case also advised Outokumpu on aspects of the deal. Petri Haussila, executive partner of White & Case's Helsinki office and global capital markets head, led a team from the firm that also included capital markets partners Mikko Hulkko and Petri Avikainen. (As The Am Law Daily noted in November, Haussila was Finland's second-highest wage earner in 2010, after former Nokia chief Olli-Pekka Kallasvuo, according to a report in YLE Uutiset.)

German firm Hengeler Mueller is serving as lead counsel to Essen, Germany-based ThyssenKrupp. The firm previously advised the company on its carve out of Inoxum, which was completed in September, according to the firm's press release.

Helsinki-based firm Hannes Snellman is also advising ThyssenKrupp, and Freshfields Bruckhaus Deringer is serving as antitrust counsel, according to German legal publication Juve.

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