Tata Steel's European unit may have to put its UK facilities on the block as it works with partner thyssenkrupp to get their proposed joint venture cleared by the European Union Commission.
The Commission, which is probing if the JV harms competition, on April 1 said that the two companies have offered 'concessions' to address its concerns. The agency though didn't give details, and has extended the deadline to give its decision on the deal from May 13 to June 5.
"Much of the concession may happen in the UK operations of Tata Steel, which could end up having minimal presence there," said a senior executive from the industry.
The joint venture will be the second largest steelmaker in Europe, behind ArcelorMittal. It will have annual revenues of 17 billion euros and will produce 21 million tons of steel a year.
The Commission had identified three industry segments - automotive steel, coated steel used for packaging and electrical steel - where the JV may harm competition.
In packaging, the Welsh business of Tata Steel UK could be on the block. A similar unit in Netherlands, where Tata Steel Europe has a major presence, is profitable, and so is thyssenkrupp's unit. So it will be the Welsh unit that will look out for new owners.
In electrical steel segment, Tata Steel has already put its Cogent unit, again in Wales, on the block. thyssenkrupp's electric steel unit is highly profitable and may be retained under the JV.
"For automotive steel, Tata Steel could shift or sell some of its product line, which will be again from Wales. This would mean that Tata Steel UK will have nominal presence post this," said an official.
Reports from European media have said that thyssenkrupp may also offer some of its glavanising units to clear the EU probe.
The JV, which will be called thysenkrupp Tata Steel BV, will be led by Andreas Goss, who is currently CEO of the German company's steel division.
The prospect of these units coming on block has already evoked interest. Germany's steelmaker Salzgitter AG has said that it will look at assets that will be divested by the Tata Steel UK-thyssenkrupp JV.
"We would certainly look at it with interest," Reuters quoted its chief executive Heinz Joerg Fuhrmann as saying.
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