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ThyssenKrupp, Tata Steel Talk Merger

Wednesday, July 13, 2016

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German industry giant ThyssenKrupp has confirmed that it is in talks with India-based Tata Steel about a possible merger, leading to speculation that Europe’s steel market may be set to further consolidate and leaving the future of Tata’s British operations up in the air.

ThyssenKrupp told The Wall Street Journal Monday (July 11) that it was in talks with the multinational steelmaker, confirming rumors that had been reported for days involving the two companies. A ThyssenKrupp representative didn’t limit the idea of talks to just Tata.

ThyssenKrupp HQ
By Tuxyso - CC-BY-SA 3.0 -- via Wikimedia Commons

ThyssenKrupp, which engineers and produces everything from ships to elevators to plastics, is Germany’s biggest producer of steel.

“We have repeatedly emphasized that in this situation we believe a consolidation of the European steel industry is necessary,” a spokeswoman told the Journal. “Among others, we are also in talks with Tata Steel,” she added.

Tata had released information Friday stating that it was exploring options with ThyssenKrupp and other companies left unnamed.

About the Players

ThyssenKrupp, which engineers and produces everything from ships to elevators to plastics, is Germany’s biggest producer of steel.

Tata Steel, a subsidiary of Tata Group, has steel operations in India, Southeast Asia, and across Europe. Its European operations include facilities in the U.K. and Ireland and a steelmaking operation in the Netherlands, in addition to product manufacturing plants throughout Europe.

Port Talbot facility
By Grubb, Public Domain, via Wikimedia Commons

Tata’s British presence includes the steelmaking facility at Port Talbot, Wales, the U.K.’s largest such operation.

In March, Tata announced that, rather than attempt to turn things around in its U.K. facilities, it planned to sell its British operations completely. Tata’s British presence includes the steelmaking facility at Port Talbot, Wales, the U.K.’s largest such operation.

With this new development, Tata hasn’t ruled out an outright sale of its British wing, but is exploring other options for all of its European operations. Media reports say the Tata-ThyssenKrupp discussions involve the possibility of forming a joint venture.

European Steel Struggles

Tata previously blamed cheap imports from China for making it tough to compete in the European market. This spring, the European Union discussed tariffs on Chinese steel; the U.K. reportedly fought aggressive duties for fear a trade war would hurt British consumers seeking to buy goods made in China.

The United States recently announced severe duties levied on Chinese steel, which other countries say is sold cheaply because it is propped up by government subsidies.

Last month’s Brexit vote leaves the future of the steel industry in the U.K. in limbo; some are still concerned that Tata might shut down its operations in the country, leaving thousands jobless. Last fall, Tata shut down one hot-dip galvanizing line in Wales.

ThyssenKrupp representatives have noted that their company is one of “just a few steelmakers in Europe” that are currently making a profit.

   

Tagged categories: Asia Pacific; EMEA (Europe, Middle East and Africa); Latin America; Mergers; North America; Program/Project Management; Steel; ThyssenKrupp

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