Thyssenkrupp's HKM Steel Joint Venture Talks with CE Capital Partners End

FRANKFURT/DUESSELDORF (Reuters) - Thyssenkrupp said on Friday investor CE Capital Partners has broken off talks about a potential purchase of the HKM steel joint venture, raising the risk of closure for the asset and its roughly 3,000 employees.

"We deeply regret this development. It was and is our primary objective to sell the shares in HKM in order to give the company and its employees prospects for the future," Thyssenkrupp Steel Europe (TKSE) said in a statement.

"It goes without saying that we remain open to discussions and to other potential buyers. We will now evaluate the situation with our shareholders after CE Capital Partners broke off talks."

The IG Metall union said that CE Capital Partners was not prepared to contribute around 200 million euros ($209 million) to an overhaul of HKM, which produces around 4 million metric tons of steel a year, adding any potential investor would need to bring in money.

CE Capital Partners declined to comment.

Thyssenkrupp previously said it would likely have to close HKM if a sale fails, a move that could help achieve capacity reduction targets as Czech billionaire Daniel Kretinsky is pondering whether to raise his stake in TKSE to 50% from 20%.

German newspaper WAZ first reported that CE Capital Partners had ended talks over a potential acquisition of HKM, which is a joint venture between Thyssenkrupp (50%), Salzgitter (30%) and France's Vallourec (20%).

Salzgitter said that no solution could be found to meet the interest of all stakeholders, including the stable continued supply of input material by HKM.

Vallourec said it had nothing to add to TKSE's statement.

($1 = 0.9547 euros)

(Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Rachel More and David Evans)