Germany’s Thyssenkrupp and India’s Tata Steel have signed a MOU to create a 50-50 joint venture to create Europe’s No.2 steelmaker after ArcelorMittal. The expected synergies of the two Europe steel giant is supposed to be 400- 600 million euros ($480-720 million) worth. The consolidation of the two companies will be headquartered in Amsterdam, The Netherlands to address overcapacity in the European steel market, subdued demand for construction and inefficient legacy plants and to compete with the cheap imports from China and elsewhere. Even though the deal will not involve any cash, according to Tata Steel, both group will contribute debt and liabilities to achieve 50-50 shareholding and will remain its long- term investors.
According to Thyssenkrupp CEO Heinrich Hiesinger, the joint venture will result in a lasting future for both Thyssenkrupp and Tata steal. The deal, however, includes 4,000 job cuts which is about 8% of the workforce. Thyssenkrupp supervisory board, Tata Steel board of directors as well as European Commission approval is required for the deal and are expected to sign a joint venture agreement at the beginning of 2018.
About Tata Steel
Owned by Tata Group and headquartered in India, Tata Steel is currently the world’s second most geographically diversified steel producer. Currently Tata Steel operates in 26 countries and has a commercial presence in over 50 countries with employees across five continents. From mining to the manufacturing and marketing of finished products, Tata Steel is a completely integrated steel operator. Tata Steel’s raw material operation is spread across India and Canada mainly and was established in 1907 in India. One of the Fortune 500 company and among the top ten global steel enterprises, Tata steel has a crude steel capacity of more than 28 million tons per annum , has had a consolidated revenues of Rs. 1329 billion ($20.2 billion) in the year 2012 . Tata Steel also employs around 81000 employees around the globe.
Employing more than 156000 people around the globe, Thyssenkrupp steel is a subsidiary of Thyssenkrupp group. Thyssenkrupp group had sales of €39 billion ($45.8 billion), has had 200 years of experience and is present in 80 countries around the globe. It also employs people from 140 different nationalities and has 100 locations for R&D worldwide. The main divisions of its business operations are components technology, elevator technology, industrial solutions, materials services, Steel Europe and Steel Americas.