Tata Steel Europe-Thyssenkrup merger hits EC opposition

The Tata Steel Group Friday said the proposed merger of its European operations with German's Thyssenkrupp has almost fallen through as they are not in a position to rework the remedy packages to assuage the concerns of the European Commission.

Tata Steel Europe and Thyssenkrupp had signed definitive agreements on June 30, 2018 to create a 50:50 pan- joint venture that would have created a steel behemoth and help salvage the struggling Tata Steel Europe, which was created after the Tatas bought out the loss-making English alloy major Corus in 2007 for USD 13.1 billion.

The JV was expected to combine the European steel businesses of the Tatas with the German firm to create Thyssenkrupp Tata Steel. The new company would have workforce of 48,000 across 34 sites and produce about 21 million tonne steel with a revenue of around 15 billion euros.

ThyssenKrupp in April had submitted a comprehensive package of solutions to the EC to get its nod for the merger.

"The Commission today discussed our proposed JV. But based on the feedback received from the Commission, it is increasingly clear that they are not intending to clear the proposal as they expect substantial remedies in the form of sale of assets of the proposed JV," Tata Steel said.

Addressing the media over a concall, Tata Steel managing director TV Narendran said, "while we are disappointed that the JV has not happened, things have also improved in the last three-four years, and we will continue to pursue other options."
Stressing that its European operations have improved over the years, he said, "we have taken some difficult calls and in many different ways we are in a better place than we were three four years ago when we started the JV discussion."
He further said they tried to enhance it and make it more specific to address the concerns of the Commission. But, "beyond a point it just doesn't work for us and that's where we are now and the competition rule demands a certain market test and obviously the customers wanted was more competition. "That is their assessment, that is their judgement based on which we received the feedback for which we felt it was unlikely to be approved."