Tata and Thyssenkrupp Steel joint venture to be called off

Tata Steel

Meanwhile, Tata Steel shares tumbled 6.10 per cent to close at Rs 487.30 on the BSE, while it dropped 6.20 per cent to close at Rs 486.95 on the NSE, according to a PTI report. But after two profit warnings, Thyssenkrupp's share price is too low to make this deal work, leaving Kerkhoff's scrambling for a Plan B, these people said.

"Consequently, the partners assume that the European Commission will not approve the joint venture", the statement said.

Tata Steel Europe and Thyssenkrupp had signed definitive agreements on June 30, 2018 to create a 50:50 pan- European joint venture.

It further said further commitments or improvements to the remedy package would adversely affect the basic foundation of the proposed joint venture and the intended synergies arising from the merger to such an extent that the economic logic of the joint venture would no longer be valid and it's the fundamental sustainability would be severely impacted. "Currently, around two-third of Tata Steel's business is India-based with best-in-class competitiveness and a focused growth strategy", Tata Steel said. One of them should contain the 50-percent share from the merger of steel business with the Indian Partner Tata.

Commenting on the merger collapse, Tata Steel said in a statement that it "would explore all options" but "remains committed" to creating "a sustainable portfolio in Europe".

Should the deal have gone ahead, it would make Tata-Thyssenkrupp Europe's second largest steel company - the largest being ArcelorMittal.

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To be named Thyssenkrupp Tata Steel, the entity will have around 48,000 workers and about 17 billion euros (USD 19.2 billion) in sales. At the end of March 2019, Tata Steel's gross debt stood at about Rs 1 lakh crore, having reduced it by Rs 18,000 crore in the last six months.

Roy Rickhuss, general secretary of the steelworkers" union Community, said the news "raises as many questions as answers" and urged against "knee-jerk reactions'.

Stressing that its European operations have improved over the years, he said, "we have taken some hard 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".

"Tata Steel's workforce has been on a rollercoaster of uncertainty for several years".

The Alfried Krupp von Bohlen and Halbach Stiftung, Thyssenkrupp's largest shareholder with a 21 percent stake, said it would assess the proposals, adding it wanted to safeguard jobs and a sustainable ability to pay dividends. There are ongoing concerns of the Commission, it was said to the grounds.

"At the same time, the company will sustainably strengthen its capital base in order to gain the necessary financial leeway for necessary restructuring and business development", the Essen-based company said.

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