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Tata Steel announced today that it has entered into the terms of a 50-50 joint venture with the German Thyssenkrupp to create the second largest European steel company after ArcelorMittal of Lakshmi Mittal.
The joint venture (JV) discussion since September last year, combines the European steelmaking activities of the Indian steel industry with the German company to create Thyssenkrupp Tata Steel BV.
The new steel company will have a total workforce of 48,000 employees at 34 sites.
"The board of directors of Tata Steel has approved the terms to create a 50:50 joint venture that will combine the European steel companies of Tata Steel and Thyssenkrupp AG and pbaded resolutions for the signing of the 39, definitive agreement, "said Tata Steel. Saturday, according to the Securities and Exchange Board Regulations of India (Sebi).
In a presentation made to badysts / investors about the final agreement with Thyssenkrupp AG for a 50:50 JV, Tata Steel said the capital structure is designed to ensure financial strength and, to achieve this, it will transfer the external debt of 2.5 billion euros.
The joint venture will issue warrants equivalent to 10% of equity. Thyssenkrupp – subject to certain dilution provisions, may be monetized by secondary sale in the event of IPO
The formation of JV will also result in the deconsolidation of Tata Steel Europe from the balance sheet of Tata Steel Group and facilitate the deleveraging, the company said.
The combine will aim to create a sustainable European steel company – a new number two on the European steel market with sales of 17 billion euros and deliveries of 21 million tons.
– A structurally robust and competitive European steel company, said Tata Steel President N. Chandrasekaran.
"This is a milestone for Tata Steel and we are fully committed to the long-term interest of the joint venture," he said.
The definitive agreement includes an "appropriate compensation" for a valuation gap between companies, which means that in the event of IPO of the joint venture, Thyssenkrupp will receive a higher share of the product, reflecting an economic ratio of 55/45. Thyssenkrupp said that he also has the right to decide exclusively the moment of a potential IPO.
"The joint venture not only raises the challenges of the European steel industry, but is the only solution to create significant added value of around € 5 billion for Thyssenkrupp and Tata Steel because of joint synergies which can not be realized in an autonomous scenario
"… With the joint venture, we create a highly competitive European steel player – based on a strong industrial and strategic logic. reasoning. Heinrich Hiesinger, CEO of Thyssenkrupp AG, said: "The merger has been welcomed by UK labor unions as the best solution for securing Tata Steel's long-term future. The Indian company owns the UK's largest steel mill in Port Talbot, South Wales, employing thousands of employees
"The Steelworkers fought to ensure the future of the As part of this joint venture, we have made significant investments in Tata Steel's UK operations, including repairs to the Port Talbot # 5 blast furnace, which could produce steel up to 10%. In 2026 at least, "said Roy Rickhuss, union general secretary.
Tony Brady, National Agent for Unite, pointed out that his union would seek guarantees for employment and investment for Tata Steel's world-clbad manpower in the UK
"These metalworkers have made great sacrifices for" We will continue to ensure that jobs and investment remain the top priorities of any coen final deal, which should be synonymous with opportunities for our members in the UK, especially after the difficult and uncertain Ross Murdoch, GMB national leader, said:
Local MP from the Port area Talbot in Wales, Stephen Kinnock, also welcomed the new announcement The "Brexit" threatening sustainable investment in the region's steel industry.
"The danger of Brexit and the fact that Trump is insidiously trying to provoke a trade war pose all sorts of risks and challenges to our industry. By joining forces with Thyssenkrupp, Tata Steel has added strength and resilience to its recovery … ", said Labor MP in a statement, who has been involved in the crisis negotiations since Tata Steel announced major changes in its European operations.
The proposed new joint venture is subject to approval of merger control in several jurisdictions, including the EU.
The joint venture will be managed as an integrated enterprise through the intermediary of a holding company based in the Dutch region of Amsterdam Thyssenkrupp Tata Steel have a two-tier governance structure, consisting of a supervisory board and a six-member executive board, on which Thyssenkrupp and Tata Steel will be equally represented.
Thyssenkrupp will present the last agreement to its supervisory board at an extraordinary meeting the week beginning July 9th.
Until the JV obtains all its licenses, Thyssenkrupp Steel Europe and Tata Steel in Europe still operate as separate companies and as competitors.
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