Tata Steel and Thyssenkrupp have reached an agreement on the merger

Tata Steel (India) and Thyssenkrupp (Germany) have agreed on a merger that promises to change the steel industry in Europe. The concluded agreement means that this joint venture is now the second largest steel factory in Europe, after ArcelorMittal, with revenues of 15 billion euros.

„The joint venture does not only address the challenges of the European steel industry,” said Heinrich Hiesinger, CEO of ThyssenKrupp. „It is the only solution to create a significant additional value of approximately 5 billion euros. Both for Thyssenkrupp and for Tata Steel due to common synergies that cannot be achieved in an autonomous scenario”.

Steel industry in Europe is under some pressure due to overcapacity

The two companies were under pressure due to overcapacity in the steel industry. European steel producers also face a 25 percent tariff on exports to their biggest market, the US.

However, the agreement cannot proceed without the approval of the competent competition authorities, which include the European Union.

The new company will be called Thyssenkrupp Tata Steel and will be based in the Netherlands. This will supply around 21 million tons of flat products annually. It will have revenues of 15 billion euros and 48,000 employees in 34 production units.

Tata Steel stated that it has made a specific commitment according to which its ambition is to have no compulsory redundancies in the UK as a result of the merger, a negotiation that lasted more than two years.

Also, Tata Steel will remain responsible for the risks related to the environment in Great Britain. Where is the base of its Port Talbot factory, the least profitable of the joint venture, said Markus Grolms, vice-president of Thyssenkrupp’s supervisory board.

Article source: http://www.euronews.com/2018/06/30/tata-and-thyssenkrupp-join-forces-to-shake-up-europe-s-steel-industr