One of the longest-running acquisition sagas in the European steel arena has been settled. Tata Steel and thyssenkrupp AG signed definitive agreements on 30 June to combine their European steel businesses in a 50/50 joint venture in a new company, Tata Steel confirms to Kallanish. This follows the signing of a Memorandum of Understanding in September 2017. The transaction is subject to merger control clearance in several jurisdictions, including the European Union.
The speculation surrounding the conditions of this deal has been rife for several months as the two companies hammered out the details of the merger. There have been many red herrings thrown out by the popular media in recent months regarding disagreements on respective company performances, ownership ratio and trade union discord. The companies and the unions meanwhile have come to a consensus as initially proposed and within the agreed timeframe.
“The proposed new company, to be named thyssenkrupp Tata Steel B.V., will be positioned as a leading pan-European high-quality flat steel producer with a strong focus on performance, quality and technology leadership. The joint venture is built on the strong foundations of common value systems and a long heritage in the industry,” Tata Steel says.
Natarajan Chandrasekaran, chairman of Tata Steel, says that “… This is a significant milestone for Tata Steel and we remain fully committed to the long-term interest of the joint venture company. We are confident that this company will create value for all stakeholders.”
“We will create a highly competitive European steel player – based on a strong industrial logic and strategic rationale. We will secure jobs and contribute to maintaining value chains in European core industries,” comments thyssenkrupp AG ceo Heinrich Hiesinger.
Until closing, thyssenkrupp Steel Europe and Tata Steel in Europe still operate as separate companies and as competitors. Only after closing, thyssenkrupp Steel Europe and Tata Steel in Europe will be integrated as one company.
There was some especially good news for the UK operations of Tata Steel in Port Talbot which had reportedly been under threat from the merger, once again according to now-incorrect general media speculation. Tata has committed to the future of the plant until at least 2026 (see related article).