Thyssenkrupp, Tata to Combine European Steel Operations
By Marc Navarro Gonzalez
Thyssenkrupp AG (TKA.XE) and Tata Steel Ltd (500470.BY) said Wednesday they have agreed to combine their European steel activities in a move that would create the region's second-largest steel producer.
The memorandum of understanding foresees a 50-50 joint venture that is expected to yield between 400 million and 600 million euros ($480 million and $719 million) annually.
Thyssenkrupp said the venture may result in the loss of up to 4,000 jobs, which would be shouldered by both companies.
"The goal is to create a leading European flat steel player with a special focus on quality and technology leadership as well as a sustainably competitive cost base," Thyssenkrupp said.
The new company--to be headquartered in the Netherlands--would have pro-forma sales of about EUR15 billion, around 21 million tons of flat steel shipments annually and an estimated 48,000 employees at 34 sites, Thyssenkrupp said. It would be the second-largest steel producer in Europe after ArcelorMittal (MT.FR).
Under the agreement, both companies will have equal representation in management and supervisory boards, Thyssenkrupp said.
The deal is subject to European Union regulatory approval.
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