Tata Steel and German steelmaker Thyssenkrupp AG have signed a memorandum of understanding (MoU) to create a joint venture, Thyssenkrupp Tata Steel, by combining the flat steel operations of the two companies in Europe and the steel mill services of Thyssenkrupp group.
The scrip gained 1.64 per cent to close at Rs 687.65 on BSE.
Mr. Dwyer said that the deal would allow ThyssenKrupp's German steel making operations to work with Tata's well-regarded plant in the Netherlands. He described the partnership as a "momentous" occasion and said that the strategic logic of the proposed JV was based on very strong fundamentals."I am confident that thyssenkrupp Tata Steel will have a great future", he said.
The European steel industry has been battling to cope with lower prices as a result of a flood of cheap imported steel, mainly from China, and the...
"The two joint venture partners expect that leveraging the cost synergies across the entire entity will require a reduction in workforce over the years ahead by up to 2,000 jobs in administration and potentially up to 2,000 jobs in production".
Thyssenkrupp and Tata Steel are set to create Europe's second largest steel firm.
Koushik Chatterjee, group executive director, Tata Steel, said the deal was an "important milestone" for Tata Steel Group in terms of its wider European portfolio strategy.
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Slaughters is advising longstanding client Tata Steel on the deal, with a team led by M&A partners Robin Ogle and Padraig Cronin, and finance partner Andrew McClean. Based on our initial assessment, cost synergies in the range of €400 to €600 million per annum may be realised through integration of commercial functions, R&D and other supporting activities.
Roy Rickhuss, chair of the steel coordinating committee representing UK unions Unite, GMB and Community, said the unions recognised the industrial logic of the deal, but would still press Tata to confirm it will invest in the Port Talbot steelworks, a vital regional employer.
Tata made the commitments to safeguard jobs and invest in Britain's Port Talbot steelworks past year in return for the unions agreeing to close their final salary pension scheme to future accrual.
Shares of Tata Steel were trading higher by 0.74 percent at 681.55 on BSE.
"In case that in the future developments would be that they would be underfunded, then the sponsor would still be Port Talbot, or Tata Steel UK, to overcome this issue", he told analysts on Wednesday.
The combination is subject to execution of the final agreements and obtaining all corporate authorisations, including Board and Tata Steel shareholder approvals.
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