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Merger to create new European steel giant

Wednesday, September 20, 2017 - 01:53

Germany's Thyssenkrupp and India's Tata Steel have struck a preliminary deal to merge their European steel operations in a 50-50 joint venture to create the continent's number two steelmaker after ArcelorMittal. Ciara Lee reports

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A 50-50 venture to create Europe's number two steel maker after ArcelorMittal. Germany's Thyssenkrupp and India's Tata Steel are addressing overcapacity in the region's steel market, which faces cheap imports from China. Plus subdued demand for construction. (SOUNDBITE) (German) THYSSENKRUPP CEO, HEINRICH HIESINGER, SAYING: "This is the best solution for our steel business and the best solution for our group as a whole. Thyssenkrupp remains involved in the steel industry and with the partnership deal signed today, we've found a European solution for a European industry that has a prospect for us, our clients and our employees - and of course also for our shareholders." The deal will involve no cash Both groups say they'll contribute debt and liabilities to achieve an equal shareholding. That's good news for Thyssenkrupp which will be freed from 4 billion euros in mostly pension liabilities. The news pushing its shares up four percent. Shares in Tata Steel were up 0.7 percent. (SOUNDBITE) (English) CCLA, CHIEF INVESTMENT OFFICER, JAMES BEVAN, SAYING: "I think the time was inevitable and essential for both companies. In the case of Thyssenkrupp, it's a reorganization that allows them to focus much more on their core industrial business. For Tata it allows them to focus far more on the Indian business. In both cases the companies benefit substantially." Tata Steel Europe has been a strain on its parent company Tata Steel for a decade. It's been burning cash at a rate of about $1 billion a year. The new company, to be named Thyssenkrupp Tata Steel, will be based in Amsterdam. The deal, once approved will create annual synergies of between 400 and 600 million euros But at a cost Up to 4000 jobs could be cut, that's around 8 percent of the joint workforce. That won't go down well in the UK where last year Tata Steel made a promise to safeguard jobs at Britain's largest steelworks in Wales

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Merger to create new European steel giant

Wednesday, September 20, 2017 - 01:53