DUESSELDORF/FRANKFURT (Reuters) - Labor leaders at Thyssenkrupp (TKAG.DE) are willing to talk to management about an overhaul of the group’s European steel operations, they said on Tuesday, but warned they remained opposed to a merger with Tata Steel (TISC.NS).
Thyssenkrupp Chief Executive Heinrich Hiesinger is under pressure to present a deal to combine Thyssenkrupp’s and Tata Steel’s European steel operations after talks have dragged on for a year and a half.
A merger is Hiesinger’s preferred option, and the company said this week a memorandum of understanding (MoU) between the companies could be reached this month.
Labor representatives however suggest the group carve out and list its healthy assets to avoid what they fear will result in thousands of job cuts.
“We want to hear what Thyssenkrupp has to say. We want to know what Thyssenkrupp has in mind,” Wilhelm Segerath, head of Thyssenkrupp’s works council and member of the group’s supervisory board, said.
“A merger with Tata is no solution. It only serves to dump debt from Thyssenkrupp’s balance sheet. We won’t support that,” Segerath said, adding steel workers would protest against the plans on Sept. 22, two days before a supervisory board meeting.
Detlef Wetzel, head of Thyssenkrupp Steel Europe’s supervisory board, said: “We want to know what the board is planning. We will evaluate that and then decide.”
Cevian, Thyssenkrupp’s second-largest shareholder and backer of Hiesinger, has not made up its mind about whether it will support his plans, a source familiar with the matter told Reuters following a report that said it was opposed.
Bjoern Voss, analyst at Warburg Research, said: “From what I understand Cevian and management have so far worked in a consensual way.”
“I find it unrealistic that the board has been working against a coalition of labor representatives and parts of the capital side,” he said.
Hiesinger’s hopes to win support rest on a complex pension deal, under which Tata Steel has separated from its 15 billion pound ($19.9 billion) UK pension scheme, seen as the main hurdle to a deal so far.
Members of the scheme now have the choice of going into the Pension Protection Fund, a lifeboat for pension schemes in Britain that run into trouble, or joining a new scheme that will be underwritten by Tata Steel, potentially leaving it exposed to some liabilities.
Reporting by Tom Kaeckenhoff and Georgina Prodhan; Writing by Christoph Steitz; editing by Susan Thomas