Thyssenkrupp expects EU to 'block' Tata merger plan
May 10, 2019
German steel giant Thyssenkrupp on Friday announced that it no longer expected the green light from the EU over a proposed merger with Indian competitor Tata. A plan to split the company in to two entities has now been put on ice.
"Thyssenkrupp and Tata Steel expect that the planned joint venture of their European steel activities will not go ahead due to the Commission's continuing concerns," the Essen-based company said in a statement.
The Commission itself declined to comment.
"At this stage all I can say is that our investigation is ongoing and that the provisional deadline for the commission to take its decision is June 17," said European Commission spokesman Ricardo Cardoso.
Job cuts
The merger would have created the scond-largest steel group in Europe, with around 48,000 employees.
The executive board of Thyssenkrupp has said it will reassess the "strategic options for the company," including, among other things, a "leaner holding structure." Later on Friday, the company announced it would shed 6,000 jobs, most of them in Germany.
The board also intends to propose to the Supervisory Board that Thyssenkrupp's elevator business be floated on the stock market.
Company split
Thyssenkrupp announced plans to divide the concern into two companies last year.
Thyssenkrupp Industrials was to become a pure capital goods company and consist of three units — the elevator business, the automotive supplier business and core plant engineering.
Thyssenkrupp Materials was to become a materials group combining steel and stainless steel production.
The group now expects adjusted Earnings Before Interest and Taxes (EBIT) of between €1.1 and €1.2 billion ($1.2 and $1.3 billion), which includes the steel division, in the financial year 2018/19. All in all, Thyssenkrupp will probably operate at a loss this year.
av/rt (dpa, AFP)