AK Steel stock surges despite bid denial
NEW YORK (Reuters) - AK Steel Holding Corp (AKS.N) shares surged nearly 8.9 percent on Wednesday, and option volume increased sharply even after German steelmaker ThyssenKrupp (TKAG.DE) denied it was considering buying a stake in the U.S. company.
"We are not bidding for AK Steel," a ThyssenKrupp spokesman said when asked about market chatter that it was interested in a 40 percent stake in the Ohio-based company. AK Steel declined to comment.
But ThyssenKrupp's denial did not appear to dampen enthusiasm on Wall Street for AK Steel. AK Steel shares closed up 8.85 percent at $12.54. Other U.S. steel company stocks were 3 percent to 4 percent higher.
"July calls are seeing interest on chatter the steelmaker is in talks with a minority investor," said WhatsTrading.com options strategist Fred Ruffy.
Traders purchased more than 3,000 calls at the July $12 strike price, and nearly 10,000 calls at the July $13 strike price on open interest of 2,393 contacts, according to Trade Alert. A call option gives the buyer the right to buy a stock at a specific price by a given date.
Analyst Charles Bradford, of Affiliated Research Group in New York, said the talk of ThyssenKrupp interest in AK was not new.
"I heard the rumor years ago before they (Thyssen) built their plant in Alabama. It made sense then, but now they've spent the $5 billion in Alabama they would have spent on AK," he said.
"They said at the time that AK had a lot of older facilities that would need upgrading, except for the one facility, Rockport, that they wanted.
"I think AK (stock) is cheap now. I don't see why management would want to sell now, they have no cash need."
AK Steel shares were selling for nearly $80 in 2008.
(Reporting by Steve James, Angela Moon and David Gaffen in New York; additional reporting by Kirsti Knolle and Anika Lehmann in Frankfurt and Matthias Inverardi in Duesseldorf; editing by John Wallace and Carol Bishopric)