Clouds over Tata Steel UK plant after merger collapse

Clouds over Tata Steel UK plant after merger collapse”

The Tata Steel-Thyssenkrupp joint venture, which had sought to blend the steel assets of the two European giants in the game, teetered on the brink of collapse after the European Commission refused to clear the merger until the two partners improved upon their original offer to divest assets.

Having shelved the merger plans and ruled out offering more concessions to Brussels in order to get a green light, Thyssenkrupp said it was now aiming for a stock market listing of its elevators business.

"Under these conditions, a separation is no longer the best solution for Thyssenkrupp".

Shares in Thyssenkrupp AG traded nearly 18% higher on the news. At the beginning of April, Thyssenkrupp and Tata Steel submitted a range of proposals in the competition Commission. "The remedies offered were developed considering the overall industrial strategy for the proposed joint venture, the integrated and complex nature of the supply chain to service customers and the need to build a sustainable business that would be able to endure the structural challenges faced by the European steel industry", it said.

Under Kerkhoff's original blueprint, Thyssenkrupp Materials was due to hold a 30 percent stake in Thyssenkrupp Industrials.

"It is clear that Thyssenkrupp's strategy of the past has failed", Cevian founding partner Lars Foerberg said.

"It's vital that the business is kept intact and the right steps are taken to safeguard jobs and continue investment to ensure a sustainable future", he added.

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The merger would have created Europe's largest steel maker and was meant to cut costs, giving the combined company a better chance of competing with cut-price global rivals. It also expects a net loss for the year, the statement added.

Its dividend has remained stagnant at 0.15 euros per share since 2014/15.

On the other hand, Thyssenkrupp is planning to restructure its businesses different and is likely to spin-off its elevators business and list it has a separate entity following an IPO.

However, the Tata chief said he was "concerned" about increasing energy costs in the UK. In the course of the realignment of the group wants to reduce to 6,000.

However, rising trade tensions between the USA and China and fears of a disorderly Brexit have dented share prices, forcing a number of companies, including Continental and Volkswagen, to review plans for spin-offs and listings.

Thyssenkrupp said it now expects to post adjusted earnings before interest and tax of 1.1 billion euros to 1.2 billion euros, and to post negative cashflow in the high three-digit million euros range for the 2018/2019 year.

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