Nerves of steel

20 September 2017 By Una Galani Follow @ugalani

The Indian group’s deal with ThyssenKrupp will shore up the ailing business it bought in 2007. But the joint venture will assume just a quarter of the European unit’s 9.5 bln euros of liabilities. That’s bad for Tata Steel shareholders. At least its rich parent is supportive.

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ThyssenKrupp and Indian rival Tata Steel on Sept. 20 provisionally agreed to combine their European steel operations in a 50-50 joint venture, creating the continent's second-largest steelmaker.

The new entity, to be named ThyssenKrupp Tata Steel, will be headquartered in the Netherlands.

The companies expect annual synergies of 400 to 600 million euros ($480 million to $720 million) as well as up to 4,000 job cuts, about 8 percent of the joint workforce.

Tata Steel will inject 2.5 billion euros worth of debt into the joint venture, the Indian company said at a press conference in Mumbai.

ThyssenKrupp and Tata Steel will need to conduct due diligence before a joint venture contract can be signed at the beginning of 2018, the German group said.

The joint venture will have a management board and a supervisory board, with equal representation from both companies.

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