ThyssenKrupp and Tata Steel to Create Europe's Second Largest Steel Producer
Germany's Thyssenkrupp AG (TKAMY) and India's Tata Steel have signed an agreement to merger the two group's steel operations in joint venture that could generate sales of around €15 billion and ignite a stand-off between unions, management and a key activist shareholder.
The two groups said the memorandum of understanding is a preliminary agreement and will be called Thyssenkrupp Tata Steel upon completion. The new unit will be run from a lean holding company in the Netherlands and have around 48,000 employees across 16 industrial locations, making in the second-largest steel producer in Europe behind ArcelorMittal SA MT. The groups expect a complete deal by 2018.
"Under the planned joint venture, we are giving the European steel activities of thyssenkrupp and Tata a lasting future," said Thysenkrupp CEO Heinrich Hiesinger. "We are tackling the structural challenges of the European steel industry and creating a strong No. 2. In Tata, we have found a partner with a very good strategic and cultural fit. Not only do we share a clear performance orientation, but also the same understanding of entrepreneurial responsibility toward workforce and society."
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