Tata Steel-Thyssenkrup joint venture approved, will become second-largest in European steel market
The resultant entity, which will be called Thyssenkrup Tata Steel BV , will be the second-largest steelmaker in European steel sector after Lakshmi Mittal's ArcelorMittal. It will have around 48,000 workers and about 15 billion euros in sales.
- Jun 30, 2018,
- Updated Jun 30, 2018 3:52 PM IST
The Tata Steel board gave the green flag to the joint venture with German steel giant Thyssenkrup today. Back in Germany, the Thyssenkrup supervisory board also approved the collaboration with the Indian steel manufacturer. This deal will see both steel majors combine their European businesses to form a 50:50 joint venture.
The resultant entity, which will be called Thyssenkrup Tata Steel BV , will be the second-largest steelmaker in European steel sector after Lakshmi Mittal's ArcelorMittal. It will have around 48,000 workers and about 15 billion euros in sales. The definitive agreement signed today will be formally executed shortly, Tata Steel said in a BSE filing.
Meanwhile, Thyssenkrup said in a statement that joining forces with Tata Group will help with its transformation into an industrial and service group, and will help to improve its financial standing.
Both parties expect the deal to be completed within 12-18 months from the date of execution of the transaction documents, the statement said, given that they get the required regulatory approval in time.
Tata Steel and Thyssenkrupp had signed a Memorandum of Understanding (MoU) back in September 2017 to this effect after announcing plans to combine their European businesses and form a joint venture. Now that they are together, the steelmaking joint venture aims to produce 35,000 million tonnes of cold rolled grain oriented steel every year from its expanded factory, instead of the earlier capacity of 10,000 tonnes per annum. The company had said the new product line set-up will help in meeting the continuously increasing demand for cold rolled grain oriented in the Indian market.
According to a Reuters report, the German steelmaker is expecting annual synergies of 400 million to 500 million euros from the transaction, having previously communicated a maximum of 600 million. Tata Steel's Dutch facility will be part of the cash pooling mechanism of the JV, which had been a key demand for German workers concerned that Tata would give its own workers better conditions in the new company.
In case of an initial public offering (IPO) of the joint venture, which is widely expected by investors and has been flagged by both companies, Thyssenkrup would get a bigger share of the proceeds "reflecting an economic ratio of 55-45," the report further said.
The Tata Steel-Thyssenkrup deal comes in the backdrop of heavy tariffs of 25 per cent imposed by the Trump administration on steel imports from both European Union and India.
The Tata Steel board gave the green flag to the joint venture with German steel giant Thyssenkrup today. Back in Germany, the Thyssenkrup supervisory board also approved the collaboration with the Indian steel manufacturer. This deal will see both steel majors combine their European businesses to form a 50:50 joint venture.
The resultant entity, which will be called Thyssenkrup Tata Steel BV , will be the second-largest steelmaker in European steel sector after Lakshmi Mittal's ArcelorMittal. It will have around 48,000 workers and about 15 billion euros in sales. The definitive agreement signed today will be formally executed shortly, Tata Steel said in a BSE filing.
Meanwhile, Thyssenkrup said in a statement that joining forces with Tata Group will help with its transformation into an industrial and service group, and will help to improve its financial standing.
Both parties expect the deal to be completed within 12-18 months from the date of execution of the transaction documents, the statement said, given that they get the required regulatory approval in time.
Tata Steel and Thyssenkrupp had signed a Memorandum of Understanding (MoU) back in September 2017 to this effect after announcing plans to combine their European businesses and form a joint venture. Now that they are together, the steelmaking joint venture aims to produce 35,000 million tonnes of cold rolled grain oriented steel every year from its expanded factory, instead of the earlier capacity of 10,000 tonnes per annum. The company had said the new product line set-up will help in meeting the continuously increasing demand for cold rolled grain oriented in the Indian market.
According to a Reuters report, the German steelmaker is expecting annual synergies of 400 million to 500 million euros from the transaction, having previously communicated a maximum of 600 million. Tata Steel's Dutch facility will be part of the cash pooling mechanism of the JV, which had been a key demand for German workers concerned that Tata would give its own workers better conditions in the new company.
In case of an initial public offering (IPO) of the joint venture, which is widely expected by investors and has been flagged by both companies, Thyssenkrup would get a bigger share of the proceeds "reflecting an economic ratio of 55-45," the report further said.
The Tata Steel-Thyssenkrup deal comes in the backdrop of heavy tariffs of 25 per cent imposed by the Trump administration on steel imports from both European Union and India.