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Thyssenkrupp, workers strike deal to pave way for Tata Steel merger

The deal removes a major obstacle to the merger, planned for next year, which will create Europe's second-largest steel group after ArcelorMittal

Reuters  |  Duesseldorf | Frankfurt 

A logo of ThyssenKrupp AG is pictured outside the ThyssenKrupp headquarters in Essen. (Photo: Reuters)
Photo: Reuters

Workers on Thursday struck a deal with German industrial company to secure plants and jobs, a big step towards a planned of the group's European business with that of India's

The deal removes a major obstacle to the merger, planned for next year, which will create Europe's second-largest group after and continue Thyssenkrupp's efforts to transform itself into a more technology-focused company.

The workers' approval for the deal, first announced in September, is seen as key to getting the deal done and shows Thyssenkrupp's commitment to seek workers' consent for far-reaching structural changes.

"The outcome achieved today represents a key prerequisite for meeting our strategic objectives and at the same time satisfying the interests of our employees," Chief Executive said in a statement.

The agreement, which still needs to be approved by the members of IG Metall, Germany's most powerful union, foresees no forced layoffs or major site closures until September 30, 2026, labour representatives and the group said.

This comes close to the union's demands for 10 years, which were made in response to concerns that might be shirking responsibility for its volatile unit, whose roots go back more than 200 years, by merging it with a rival.

and in September reached a preliminary agreement to merge their European units to create the continent's second-largest steelmaker after ArcelorMittal, with 15 billion euros ($17.81 billion) of sales.

They said the deal will help them to tackle overcapacity in Europe's market, which faces cheap imports, subdued construction demand and inefficient legacy plants.

The have already announced 4,000 job cuts as part of the tie-up.

Under Thursday's labour deal, said it would keep a stake in the joint venture for at least six years. It said a change in the entity's shareholder structure during that time, possibly as the result of a stock market listing, could not be ruled out.

"That means that management will share responsibility for either the success or the failure of a possible joint venture," Detlef Wetzel, deputy supervisory board chairman of Europe, told Reuters.

Thyssenkrupp, which also said it would invest at least 400 million euros a year at its German sites, still needs to get the joint venture deal through its supervisory board before a final contract can be signed in 2018.

($1 = 0.8423 euros)

First Published: Fri, December 22 2017. 10:39 IST
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