Czech billionaire Daniel Křetínský and his EP Corporate Group (EPCG) energy holding company have struck a deal to buy a 20% stake in thyssenkrupp Steel, Germany's largest steelmaker.
Negotiations remain under way for Křetínský's firm to buy a further 30% stake in thyssenkrupp Steel, which is a subsidiary of German industrial giant tyssenkrupp.
The aim is to form a joint venture in which both partners each hold 50% of the steel business, the Essen-based thyssenkrupp announced on Friday.
In November, thyssenkrupp publicly revealed ongoing negotiations with Křetínský about its entry into the company's struggling steel business.
Labour leaders at thyssenkrupp Steel expressed criticism of the deal on Friday and demanded strict compliance with collective bargaining agreements.
Neither side would disclose the financial terms of the deal or the valuation of thyssenkrupp's steel business. An analyst at Baader Bank estimated that Thyssenkrupp could receive €350 to €400 million ($374 to $427 million).
Thyssenkrupp chief executive Miguel López noted EPCG's background in the energy business and argued that the joint venture would give thyssenkrupp Steel a better chance to make the transition to lower-emission steel production.
"Together we want to create a high-performance, profitable and future-oriented steel company," López said.
López said the deal would allow the company to reduce the costs of decarbonization to a more competitive level and thus accelerate the green transformation of the steel industry on the way to CO2 neutrality.
"A strong energy partner like the EP Corporate Group is essential for this," he added.
Křetínský said that EPCG "is financially strong, growing and is a reliable provider of energy and services for our customers."
Křetínský said that together, thyssenkrupp and EPCG will make an important contribution to the decarbonization of the steel industry.
According to a thyssenkrupp press release announcing the deal, EPCG will act as a strategic partner to ensure a sufficient supply of energy in the form of hydrogen, renewable electricity and other raw materials for the steelmaking process.
EPCG, which is active in nine European markets, has extensive industry knowledge as an energy trader, supplier and distributor, the company said.
The deal is expected to close before the end of thyssenkrupp's current financial year on September 30. Regulatory authorities, as well as thyssenkrupp's supervisory board, will still need to sign off on the deal.
The company emphasized that the transaction is not expected to have any impact on existing labour and collective bargaining agreements.
In the past financial year, thyssenkrupp had to write off billions of euros in losses on its steel business, which is suffering from weak demand and lower prices coupled with higher costs.
Thyssenkrupp recently announced plans to cut production at its Duisburg steel plant, which is expected to lead to further job cuts.
Around 27,000 people work for thyssenkrupp Steel, nearly half - 13,000 of them - in Duisburg. Almost all sites are located in the western German state of North Rhine Westphalia, which is historically Germany's heavy industrial heartland.
Employee representatives from thyssenkrupp were critical of the investment plan and expressed displeasure at the way the deal was announced.
The news comes as a surprise, with labour representatives informed "only a few hours before the public," said Jürgen Kerner, a labour representative on thyssenkrupp's supervisory board and the deputy chairman of the IG Metall industrial trade union.
"That's not good style and not a good start," Kerner said.
Labour leaders at the company have never spoken out against an investor in principle, Kerner said, "but we expect to participate in co-determination on an equal footing and with binding commitments."