TATA Steel and ThyssenKrupp merges and creates Europe’s second-largest steel maker

Tata which owns the UK’s largest steelworks at Port Talbot in South Wales that employs 4000 people and ThyssenKrupp has agreed for a merger with a combined annual sale of £13bn and will create Europe’ second-largest steelmaker, after Arcelor Mittal.

Three months ago, the pensions regulator approved the creation of a new pension fund after Tata agreed to a £550m top-up. The German group will transfer pension obligations worth €4bn into the joint venture, while Tata will put in €2.5bn in debt. Both partners hold a 50 per cent equity stake, but ThyssenKrupp would get 55 per cent of the proceeds of a future initial public offering.

Elliott Management, the New York hedge fund that has emerged as a key player in big European takeover battles. Wrote Thyssen’s board who has faced pressure from shareholders to secure better terms from Tata, said that Tata’s recent financial results did not warrant it receiving a half-share in the combined business.

The merged firm known as ThyssenKrupp Tata Steel will be based in the Netherlands with a combined workforce of 48, 000 employees spread across 34 sits, producing 21 million tons of steel a year.

The deal makes another change of ownership for Britain’ steel industry, which once led the world, and the industry was nationalised after World War Two and then re-privatised in 1986 as the British Steel Corporation. It became Corus after a merger with a Dutch rival Koninklijke Hoogovens, in 1999, was bought by India’s Tata Steel in 2006. The British Steel name was revived two years ago when investment fund Greybull Capital bought Tata Steel’s Scunthorpe-based production division.

Tata Steel chairman Natarajan Chandrasekaran said, “ The joint venture will create a strong pan-European steel company that is structurally robust and competitive”.

Dr Heinrich Hiesinger, CEO of ThyssenKrupp said: “ We will secure jobs and contribute to maintaining value chains in European core industries.”

Hiesinger who took the reins of the German industrial conglomerate in 2011, stepped down on 5th July 2018.