Thyssenkrupp expects European Union to 'block' Tata merger plan


The aim of the joint venture had been to create the second-largest European steel company behind multinational giant ArcelorMittal and to join forces in the face of the surge of Chinese steel.

"Based on the feedback received, it is increasingly clear that the Commission is not intending to clear the proposed JV as it expects substantial remedies in the form of sale of assets of the proposed venture".

Germany's Thyssenkrupp and India's Tata have abandoned a blockbuster merger of their European steelmaking operations, raising fears for jobs at the Tata-owned Port Talbot plant in south Wales. "Obviously we will go back to the drawing board and look at more options".

"But we have plans to keep United Kingdom (operation) running as long as they are performing well and is cash positive, and I think the team there is working hard to make it that way".

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.

"We want to make sure this year we run it well and we run it in a manner that is cash positive. In the last 18 months it's gone up quite significantly and that's not helping us".

"I think the team there is working hard to make it that way", he added.

Thyssenkrupp is considering a carve-out or listing of its elevators business after abandoning plans to split itself up with a cross-shareholding structure, three sources familiar with the matter told Reuters on Friday.

Tata, which operates the iconic blast furnace at Port Talbot in the United Kingdom and another big plant in the Netherlands, has been trying to find a solution for its European business since being hit by the 2016 commodity crisis, though many of its troubles stem from before then. "The remedies offered were developed considering the overall industrial strategy for the proposed joint venture, the integrated and complex nature of the supply chain to service customers and the need to build a sustainable business that would be able to endure the structural challenges faced by the European steel industry", it said.

"It's important that there are no kneejerk reactions by Tata Steel in response to this development".

"Tata Steel remains committed to the above strategy and would explore all options to achieve similar outcomes in the future".

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.

Unions meanwhile warned it meant another period of uncertainty for steelworkers and said it was "time for calm heads and a clear focus" on the future of Tata in Europe.