(Alliance News) - thyssenkrupp AG and EP Corporate Group AS on Friday said they have agreed on the first step to combine forces in European steelmaking.

EP Corporate will buy a 20% stake in thyssenkrupp's steel business for an undisclosed price. The pair also are in talks for EP Corporate to buy a further 30% with the aim to form an equal joint venture for steel production.

Prague-based EP Corporate is an energy company majority owned by Czech billionaire Daniel Kretinsky. The company also is an investor in the UK's International Distributions Services PLC. Earlier this month, EP Corporate made a GBP3.06 billion takeover offer for the Royal Mail-owner, which has been rejected.

thyssenkrupp shares were up 11% at EUR4.95 in Frankfurt early Friday.

thyssenkrupp and EP Corporate said they have started a "multi-year process towards full entrepreneurial independence of thyssenkrupp Steel Europe", with hopes for "resilient, cost-efficient and climate-friendly steel production at thyssenkrupp Steel" and "safeguarding the future of the steel industry in Germany".

thyssenkrupp Steel is the largest flat steel producer in Germany.

Explained Miguel Lopez, chair of the executive board of thyssenkrupp, explained: "Together, we want to create a high-performance, profitable and future-oriented steel company that reduces the costs of decarbonization to a more competitive level and thus accelerates the green transformation of the steel industry on the way to CO2 neutrality.

"A strong energy partner such as the EPCG is indispensable for this."

Added Kretinsky, who also is chief executive officer of EP Corporate: "Reaching an agreement on the acquisition of the 20% share in thyssenkrupp Steel Europe is an initial step on the envisaged path that shall eventually lead towards a bigger leap in the planned strategic partnership."

By Tom Waite, Alliance News editor

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