thyssenkrupp foundation reiterates support for JV with Tata Steel

The logo of German steel-to-elevators group ThyssenKrupp AG is pictured during the company's annual news conference in Essen

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The thyssenkrupp foundation has reiterated its support for the German conglomerate’s steel joint venture with Tata Steel. This comes after increasing talks casting doubt on the future of the joint venture because of the leadership vacuum at thyssenkrupp, and the possibility of some of the shareholders asking for a re-look at the JV agreements.

The Alfried Krupp von Bohlen und Halbach Foundation is the highest shareholder in thyssenkrupp with a holding of 21 percent.

“The foundation is committed to the continued existence and long-term well-being of the company. In this spirit, it welcomed the joint venture between thyssenkrupp and Tata Steel. The Foundation remains firmly committed to this stance,” a representative told Moneycontrol in a written reply.

Tata Steel and thyssenkrupp had signed the agreement on June 30, creating a joint venture that will be the second largest steelmaker in Europe after ArcelorMittal. The JV will have a combined turnover of 17 billion euros and a capacity of 21 million tons a year.

While the German company has a 55 percent share in the JV and will get a bigger share if the JV goes for an IPO, some of its shareholders – including activist shareholders Cevian and Elliott “are demanding substantially higher return than agreed with the earlier CEO of thyssenkrupp,” said a senior industry official.

Central to the issue was the fall in Tata Steel Europe’s performance, even as rest of its peers including thyssenkrupp have reported improved numbers.

Also, within a month of signing the JV, thyssenkrupp’s CEO Heinrich Hiesinger, followed by Chairman Ulrich Lehner, put in their papers. The JV with Tata Steel was a critical part of Hiesinger’s plan to turnaround thyssenkrupp.

Now the company, one of the German icons, is finding it difficult to fill the posts. Reuters reported three possible candidates have declined an offer to Chair the 42-billion euros giant. The newswire quoted sources as saying the new chairman should be appointed “not later than September” to prevent a delay, or even a collapse, of the restructuring exercise at the company.

The deal with Tata Steel was expected to be completed by December.

The Foundation Chairwoman, Ursula Gather, had welcomed the JV.

“The joint venture with Tata Steel must now be systematically implemented and the Group's other divisions must be further developed with a view to the future,” she had said.