Tata Steel signs MoU which could safeguard 8000 United Kingdom jobs

Sep 21, 2017, 00:39
Tata Steel signs MoU which could safeguard 8000 United Kingdom jobs

ESSEN, Germany/MUMBAI, Sept 20 (Reuters) - Germany's Thyssenkrupp and India's Tata Steel agreed on Wednesday to merge their European steel operations, creating the continent's No.2 steelmaker with revenues of 15 billion euros ($18 bln).

Thyssenkrupp shares rose 4 per cent, boosted by hopes that the joint venture will ease the burden on its balance sheet, which will be freed from €4 billion (Dh17.64bn) in mostly pension liabilities.

In terms of volume, 6.50 lakh shares of the company were traded on BSE and over 87 lakh shares changed hands at NSE during the day.

The new entity, to be named ThyssenKrupp Tata Steel, will be headquartered in the Netherlands.

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"The strategic logic of the proposed joint venture in Europe is based on very strong fundamentals and I am confident that thyssenkrupp Tata Steel will have a great future". "We are tackling the structural challenges of the European steel industry and creating a strong No 2".

N Chandrasekaran, Chairman, Tata Steel said, "As our partnership with thyssenkrupp progresses in Europe, Tata Steel is well positioned to leverage India's growing economy by adding significant capacity in value added products to meet emerging customer needs".

The deal will reportedly create Europe's second-largest steel group, after ArcelorMittal. "Not only do we share a clear performance orientation, but also the same understanding of entrepreneurial responsibility toward workforce and society". Tata and ThyssenKrupp expect to make annual cost savings of between €400m and €600m by combining their sales and administrative functions, research and development, and procurement and logistics.

The scheme, a successor to the BSPS dubbed BSPS II, will be sponsored by Tata Steel UK and its Port Talbot plant.

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Tata blamed £1m a day losses on cheap imports of Chinese steel, high energy costs, and weak demand. Each company would own half of the new business, which would be based in Amsterdam.

"As always, the devil will be in the detail and we are seeking further assurances on jobs, investment and future production across the United Kingdom operations".

They have been in negotiations since past year when Tata withdrew from a sales process to sell its entire United Kingdom operations, including Port Talbot - the largest steel works in the UK.

The deal will require the approval of Thyssenkrupp's supervisory board and Tata Steel's board of directors as well as that of the European Commission.

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