Tata and ThyssenKrupp 'agree' first stage of merger deal

Ivan Schwartz
September 21, 2017

The MoU will be followed by negotiations about the details of the merger as well as due diligence before a contract can be signed at the beginning of 2018, Thyssenkrupp said.

"Under the planned joint venture, we are giving the European steel activities of Thyssenkrupp and Tata a lasting future", Thyssenkrupp CEO Heinrich Hiesinger said.

Commenting on the MoU, N Chandrasekaran, Chairman, Tata Steel said, "The Tata group and Thyssenkrupp have a strong heritage in the global steel industry and share similar culture and values".

Thyssenkrupp's (TKAG.DE) works council is prepared to consider a merger of the group's European steel operations with those of Tata Steel (TISC.NS), it said on Tuesday, softening its no-go rhetoric over the consolidation plan. Tata and ThyssenKrupp expect to make annual cost savings of between €400m and €600m by combining their sales and administrative functions, research and development, and procurement and logistics.

Even as the two major players Tata Steel and Thyssenkrupp cheer the synergies that is likely to manifest after the two come together to form Europe's second-largest producer of Steel in a Joint Venture arrangement, 4,000 jobs are set to be axed in the United Kingdom.

"This partnership is a momentous occasion for both partners, who will focus on building a strong European steel enterprise", he said.

Under the agreement, both companies will have equal representation in management and supervisory boards, Thyssenkrupp said.

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Tata Steel Europe has been a strain on the parent company Tata Steel for the past 10 years, causing it to burn cash at a rate of about US$1bn a year.

The European steel industry has been battling to cope with lower prices as a result of a flood of cheap imported steel, mainly from China, and the...

However of course, as always, the devil will be in the detail and we are seeking further assurances on jobs, investment and future production across the United Kingdom operations.

Shares in Tata Steel were up 0.7 per cent.

The new company includes the former Hoogovens plant in IJmuiden which was merged with British Steel to create Corus in 1999.

Thyssenkrupp will not be liable for any future funding demands of a new pension scheme sponsored by Tata Steel UK, its chief financial officer said.

The combination is subject to execution of the final agreements and obtaining all corporate authorisations, including Board and Tata Steel shareholder approvals.

Other reports by GizPress

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