Prince Mathews Thomas Moneycontrol News
The proposed joint venture between Tata Steel's European unit and thyssenkrupp may have to divest some of its assets to address concerns raised by the European Commission.
The Commission, which is checking if the JV will harm competition, had issued a Statement of Objections on February 13.
"thyssenkrupp is currently assessing the document carefully and will use the Statement of Objections as basis for engaging in further constructive talks with the European Commission in order to address their competitive concerns in an appropriate manner," the German company said in a debt issuance prospectus on February 15.
And it added: "... if needed by proposing divestments of certain assets."
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.
While a Financial Times report had pointed out that the joint venture will have a 27 percent share in Europe's flat steel market, the share increases if sub-segments of the steel market is considered. The Commission has identified three of these segments - automotive steel, coated steel used for packaging and electrical steel - where the JV may harm competition.
Tata Steel Europe's Port Talbot facility makes steel used in the automotive and packaging industries.
When asked, spokespersons of the two companies declined to comment specifically on the possible asset sale. The two companies, separately, shared a similar statement.
They said: “As it was already announced the EU-Commission has meanwhile forwarded to us a so-called Statement of Objections. Given the size of the planned transaction this is no surprise and was expected by us. We regard this as a basis for further talks with the Commission and we will now thoroughly examine the Commission’s concerns. We still are confident to receive the Commission’s clearance during the course of this spring.”
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.
Hans Fischer, the current CEO of Tata Steel Europe, will be the Deputy CEO and Chief Technology Officer of the new company. Sandip Biswas, who is currently the Group Executive Vice President, Finance, Tata Steel Limited, is the designated Chief Financial Officer.
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