Germany’s Thyssenkrupp and India’s Tata Steel struck a preliminary deal on Wednesday, September 20, to merge their European steel operations in a 50-50 joint venture to create the continent’s No.2 steelmaker, after ArcelorMittal.
The deal will not involve any cash, Tata Steel said, adding that both groups would contribute debt and liabilities to achieve an equal shareholding and remain long-term investors.
The companies say they need to consolidate to address overcapacity in the European steel market, which faces cheap imports from China and elsewhere, subdued demand for construction and inefficient legacy plants.
Thyssenkrupp shares were indicated up more than 5% in pre-market trade in Germany while Tata Steel was up 0.7% in India.
Tata Steel last month reached a landmark deal that will allow it to reduce £15 billion (US$20 billion) in pension liabilities, long seen as the main hurdle in talks between the companies, which have lasted more than a year and a half.
Full Content: Financial Times
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