Thyssenkrupp, Tata Clinch European Steel Deal -- 2nd Update
20 September 2017 - 07:38PM
Dow Jones News
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 yearslong 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.
"We are giving the European steel activities of Thyssenkrupp and
Tata a lasting future," said Thyssenkrupp Chief Executive Heinrich
Hiesinger. "We are tackling the structural challenges of the
European steel industry and creating a strong No. 2."
The deal represents Thyssenkrupp's latest move to reduce
exposure to steel and focus on its capital-goods operations such as
elevators, sophisticated car components and submarines. It follows
the sale of its Brazilian steel plant, the last of its steel assets
in the Americas, earlier this year.
Shares in Thyssenkrupp rose almost 5% shortly after trading
began Wednesday, while Tata Steel rose 0.9%.
The new company -- to be based in the Netherlands and named
Thyssenkrupp Tata Steel -- will have pro-forma sales of about EUR15
billion, ship about 21 million tons of flat steel a year and have a
workforce of about 48,000 employees at 34 sites. It will be
Europe's second-largest steel producer after ArcelorMittal.
Under the agreement, both companies will have equal
representation in the joint venture's management and supervisory
boards.
The companies said they hoped to formally sign the deal in 2018
and complete and start the JV in late 2018, following regulatory
approval, especially from the European Union.
(END) Dow Jones Newswires
September 20, 2017 05:23 ET (09:23 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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