Thyssenkrupp workers, some investors give CEO time for Tata Steel deal

By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUISBURG (Reuters) - Thyssenkrupp workers and a group representing some of the steelmaker's investors offered its chief executive more time to finalise a planned joint venture deal with Tata Steel on Thursday.

Heinrich Hiesinger is under fire from activist funds Cevian and Elliott and is scrambling to agree a joint venture that will satisfy employees and shareholders, amid frustration over talks which have dragged on for more than two years.

Thyssenkrupp and Tata Steel are now in the final stages of negotiations to combine their European steel assets to create the continent's second-largest player after ArcelorMittal.

Hiesinger, 58, has promised a deal by end-June, but talks hit a snag after Thyssenkrupp's European steel business outperformed Tata Steel's, leaving a valuation gap which the two parties are now seeking to bridge.

"There are still a number of unresolved issues until a possible signing," Tekin Nasikkol, chairman of Thyssenkrupp Steel Europe's works council and a member of Thyssenkrupp AG's supervisory board, said in a statement.

"We expect all parties to focus on diligence rather than speed in fixing the problems," he added. "If Mr Hiesinger needs more time he can have it as far as I'm concerned."

Hiesinger has several options to address the valuation gap and is seeking approval for the venture from Thyssenkrupp's 20-member supervisory board, where half of the seats are held by labour representatives, by the end of next week.

"You should seal the deal but not without hammering out the main points," said Thomas Hechtfischer, managing director of investor advisory group DSW, which usually represents 1 percent of Thyssenkrupp's voting rights at its annual general meeting

"But Hiesinger's mantra is 'diligence beats speed' - and that's a good thing."

Hiesinger's options range from changing the 50-50 ownership structure, possibly to 55-45 or 60-40 in favour of Thyssenkrupp, transferring more Thyssenkrupp debt onto the venture, excluding Tata Steel from dividend payments or securing a cash payment from the Indian firm to settle the difference.

Nasikkol confirmed labour leaders would not support the venture taking on more debt. So far, Thyssenkrupp plans to transfer 4 billion euros ($4.6 billion) in liabilities, compared with Tata Steel's 2.5 billion.

He also said there was a good chance that Tata Steel would finalise a labour deal with its British and Dutch workers by the end of the month - a key condition for German unions to approve the joint venture in Thyssenkrupp's supervisory board.

($1 = 0.8647 euros)

(Editing by Mark Potter and Alexander Smith)