TKAMY Thyssenkrupp AG (PK)

By Marc Navarro Gonzalez 

Thyssenkrupp AG and Tata Steel Ltd. said Wednesday they have agreed to combine their European steel activities in a move that would create the region's second-largest steel producer.

The agreement brings to an end more than a year of talks between the companies amid a flurry of deal activity among European steelmakers to cope with a protracted steel-capacity glut and a wave of inexpensive steel imports from countries such as China. European steelmakers have also shed thousands of jobs and closed unprofitable plants.

The 50-50 joint venture is expected to yield "synergies" of between EUR400 million and EUR600 million ($480 million and $719 million) a year but may result in the loss of up to 4,000 jobs, which would be shouldered by both companies.

"The goal is to create a leading European flat steel player with a special focus on quality and technology leadership as well as a sustainably competitive cost base," Germany's Thyssenkrupp said.

Shares in Thyssenkrupp rose almost 5% shortly after trading began Wednesday.

The new company--to be based in the Netherlands--would have pro forma sales of about EUR15 billion, around 21 million tons of flat steel shipments annually and an estimated 48,000 employees at 34 sites, Thyssenkrupp said. It would be the second-largest steel producer in Europe after ArcelorMittal.

Under the agreement, both companies will have equal representation in management and supervisory boards, Thyssenkrupp said.

The deal is subject to European Union regulatory approval.

(END) Dow Jones Newswires

September 20, 2017 04:02 ET (08:02 GMT)

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