Carlyle Quits Bidding Process for Thyssenkrupp Marine Arm

Private equity firm Carlyle has dropped out of a bidding process for the warship division of stricken conglomerate Thyssenkrupp, the German company said on Tuesday.

Carlyle's withdrawal as a suitor for Thyssenkrupp Marine Systems (TKMS) is a major blow to Thyssenkrupp's restructuring, which also includes plans for a 50:50 steel joint venture with Czech billionaire Daniel Kretinsky.

"We can confirm that the investment company Carlyle Group has informed us that it is withdrawing from the bidding process for the investment in Thyssenkrupp's marine division," Thyssenkrupp said in a response to emailed questions.

Thyssenkrupp shares fell as much as 3.7% on the news.

The company did not say why Carlyle had pulled out, adding that it would now focus on a spin-off of the division, which builds submarines and frigates, but remains open to industrial partnerships.

Carlyle declined to comment.

The German economy ministry said it was in talks with Thyssenkrupp about the future of its marine business but declined to give further details.

Sources told Reuters in June that Carlyle and state lender KfW were in talks over joint acquisition of a majority stake in TKMS, saying the business was then valued at about 1.6 billion euros ($1.73 billion).

Thyssenkrupp Chief Executive Miguel Lopez told analysts in August that he was confident efforts to sell TKMS, either to a consortium of buyers or via a spin-off, would succeed in the "coming months".

Thyssenkrupp, which also produces car parts and operates a big materials trading business, said it remained in talks with the government about possible participation in TKMS, which generated nine-month operating profit (EBIT) of 74 million euros, up more than two thirds year on year.

"We remain convinced that the naval sector can best take advantage of the industry's global growth opportunities by operating independently," Thyssenkrupp said.

"In addition, independence offers a good starting position for possible national and European consolidation."

($1 = 0.9248 euros)

(Reuters - Reporting by Christoph Steitz; Editing by Jo Mason, Madeline Chambers, Tomasz Janowski and David Goodman)