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The Germans Thyssenkrupp and Tata Steel finally agreed Saturday to establish a long-term joint venture, which would create the largest European steel company after ArcelorMittal.
This agreement was "a solid response to the challenges of the steel market". and would create an additional value of 5 billion euros for both companies, said the two steelmakers in a joint statement.
Secured Concessions
The announcement comes after Thyssenkrupp's supervisory board agrees. Friday, after the German group obtained a number of concessions to reflect a "valuation gap" that had developed between the two entities.
The company set up by the 50:50 joint venture – called Thyssenkrupp Tata Steel – to be run by a Dutch-based holding company, employs around 48,000 workers and has achieved an estimated turnover of 17 billion euros. # 39; euros. Synergies are expected to be in the range of 400 to 500 million euros
The agreement provided for an "appropriate compensation" for the value difference – a number of. Thyssenkrupp's activist investors, including Elliott, had pushed these last few weeks terms – including agreeing that in the case of an IPO, Thyssenkrupp would receive a higher share of the product, reflecting a ratio of 55: 45 in favor of Thyssenkrupp. Thyssenkrupp would also have the right to "exclusively decide" the timing of an IPO.
"Robust and Competitive"
"The joint venture will create a strong pan-European steel company Natarajan Chandrasekaran, chairman of Tata Steel, said in the statement." C & # 39; a milestone for Tata Steel and we remain fully committed to the long-term interest of the joint venture. "
The company comes at a time when the European steel industry is experiencing new Pressures following the introduction of 25% duties US steel imports on June 1st are not limited to hitting European companies in the lucrative and high value-added US market, but the tariff regime is expected to lead to a drop in steel on the European market Review of EU safeguards
The EU is investigating whether its scheme of safeguards against dumping is adequate, even if a A number of other industries – such as China – are striving to find a market. like the auto and construction sectors – have pushed back tough measures, arguing that this would not be in the interest of European consumers.
"With the joint venture, we are creating a highly competitive market.A European steel player – based on a strong industrial logic and strategic logic," said Heinrich Hiesinger, CEO of Thyssenkrupp, in the communiqué. "This will help secure jobs and value chains in European industries."
Tata Steel British Unions
British Tata Steel unions welcome this announcement. Significant investments in the UK steel sector, including the repair of one of the Port Talbot blast furnaces.The agreement also supports a commitment to avoid compulsory redundancies. until October 2026, and another that the first $ 200 million of any business profit would be reinvested in the business.
"This business will only succeed If the Investments are made to enable the business to thrive, "said Roy Rickhuss of the community union. "We will seek guarantees on jobs and investments in British joint venture operations to secure the future of British steel," said Tony Brady, of the Union Unite.
"For this joint venture to truly succeed and guarantee According to Stephen Kinnock, the Aberavon MP, where the Port Talbot plant is located, the ongoing investment in the factory is necessary beyond the work currently being done on the blast furnace.5 "
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