FRANKFURT (Reuters) - German industrial group Thyssenkrupp (TKAG.DE) and India’s Tata Steel (TISC.NS) expect a merger of their European steel businesses to yield annual savings of 400 to 600 million euros (346-519 million pounds) , a German magazine reported on Thursday.
Thyssenkrupp and Tata Steel have been in discussions since July about merging their European steel assets to cut costs and reduce overcapacity.
The plan has been complicated by Tata’s pension deficit in Britain. A source close to Thyssenkrupp said a deal this month to separate Tata’s 15 billion pound UK pension scheme still left many questions unanswered.
Monthly Manager Magazin, which cited unspecified sources, said talks had gained momentum again after temporarily stalling following Britain’s decision to leave the European Union and a management reshuffle at Tata.
The parties have agreed that if there was a “hard” exit of Britain from the EU, Tata’s Port Talbot works in Wales would resort to supplying the UK automotive sector, the report said.
The term “hard Brexit” usually refers to Britain leaving the EU’s single market in order to impose controls on immigration, disrupting access to the country’s main trading partner.
The report said Thyssenkrupp Chief Executive Heinrich Hiesinger planned to offload 3 billion euros of pension obligations onto the steel joint venture that would be formed in any merger deal with Tata.
Thyssenkrupp declined to comment on the report and said it remained unclear whether, when or with whom consolidation may take place. Tata Steel was not immediately available for comment.
Reporting by Maria Sheahan; Editing by Edmund Blair