(Bloomberg) -- FLSmidth A/S is in talks with ThyssenKrupp AG about a possible acquisition of its mining business, as the German group works through a restructuring to return to profit.
The talks “are at a non-binding stage,” the Danish construction and engineering firm said in a statement Friday. The unit had annual revenue of about 6 billion kroner ($978 million) last fiscal year, according to FLSmidth.
“The timing is right and the combination of both companies is significantly more attractive to the mining industry,” Chief Executive Officer Thomas Schulz said in a phone interview. He declined to comment on reports the talks might include ThyssenKrupp’s cement unit.
ThyssenKrupp is in the midst of a restructuring that includes cutting about 10% of its workforce as its steel business hemorrhages cash. A purchase would make mining about 75% of FLSmidth’s operations and would complement its digitization and sustainability plans, Schulz said.
“By raising volumes in mining FLSmidth can get a larger footprint in an industry with a strong growth outlook and where competitors are growing as well,” Mikkel Emil Jensen, an analyst at Sydbank, said in a phone interview.
FLSmidth shares gained 2.2% to 223.4 kroner as of 2:41 p.m. in Copenhagen, while ThyssenKrupp rose 0.8% to 9.51 euros.
(Updates with analyst comment in fifth paragraph.)