thyssen and Tata offer merger concessions to Commission

Tata Steel Europe and thyssenkrupp have submitted a list of subsidiaries to the European Commission (EC) that they would offer for sale to clear the way for their projected ‘thyssenkrupp Tata Steel’ joint venture.

“As we see it, our proposals cover all the concerns expressed by the Commission,” thyssenkrupp AG ceo, Guido Kerkhoff, says in a statement. “The offer is extensive and substantial. At the same time, it is acceptable to the joint venture partners and, no risk to the industrial logic of the joint venture.”

The EC had identified three product groups for discussion: hot-dip galvanized steel strip for the automotive industry, packaging steel and grain-oriented electrical steel strip. The EC has apparently now abandoned its concerns over electrical steels.

While details of the companies’ proposal were not made public, Kallanish hears several suggestions from insiders that are in line with earlier speculation. In the automotive industry HDG segment, the companies are offering two plants in Spain and Belgium for sale, which they say adequately address the amount of production capacity required by the EC. In packaging steel, they would divest two such Tata Steel sites in Belgium and the UK. No German sites have been highlighted as part of the proposals, sources suggest.

Furthermore, they are offer options on input materials such as crude steel, if requested by the purchaser, such as long-term supply contracts on a cost-plus basis. At the same time, they are questioning the rationale behind some of the requirements, insiders suggest.

One possible disagreement might emerge from the EC idea that the parties would have to offer the divestiture of assets along the entire value chain. thyssenkrupp and Tata, however, argue that this does not make industrial sense and depends on the nature of the buyer. They are prepared to select only buyers who are already active in steel production, have sufficient capabilities and can ensure successful long-term operation of the plants. This would exclude equity investor firms.

If the current conditions are accepted, an EC decision is expected for the beginning of June 2019.