In simultaneous statements, both thyssenkrupp AG and Tata Steel Limited have confirmed that they expect the European Commission to block the proposed merger of the two companies’ European steel operations.
The long-discussed joint venture has been fraught with difficulties since the concept was first publicly launched in 2016. It had in fact been signalled as far back as 2014, Kallanish notes. It has seen criticism from local and national trade union groups especially, concerned about the effect on jobs and a variety of differences in business culture. The European Commission specifically has never appeared comfortable with the proposed deal.
“After today’s conversation with the European Commission, 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,” tk says in a statement on its website.
“The European Commission took the improvements of the submitted covenants proposed by thyssenkrupp and Tata Steel as an opportunity to conduct another market test. The new market survey did not resolve the Commission’s concerns, although the partners had offered significant further concessions,” the statement continues.
The statement goes on to say that any further commitments or improvements would adversely affect the intended synergies of the merger to such an extent “… that the economic logic of the joint venture would no longer be valid.”
Tata meanwhile highlighted that the commission’s feedback has indicated that is not intending to clear the proposed joint venture as it expects substantial remedies “… in the form of sale of assets of the proposed venture.”
The tk steel business will now be absorbed back into the main group, the German company says. Tata has given no indication as yet, what the future holds for its European operations.
