Tata Steel Forges Ahead With Thyssenkrupp JV After EU Opened Probe -- Update
October 31 2018 - 5:44AM
Dow Jones News
(Adds Thyssenkrupp's lack of response regarding Tata's plans,
background on opinions among analysts and shareholders regarding
the deal and broader restructuring plans at Thyssenkrupp)
By Nathan Allen
Tata Steel Ltd. (500470.BY) said Wednesday that it will continue
to pursue a merger of its European business with Thyssenkrupp AG's
(TKA.XE) Steel Europe division after the European Commission opened
an in-depth investigation into the deal, citing competition
concerns.
The Indian group said it had noted the commission's concerns and
will continue its discussions with the regulator, pledging to
provide further information and analysis of the merger.
Tata said it continues to believe in the "strong industrial
logic and rationale for the proposed joint venture," which would
create Europe's second-largest steelmaker by revenue.
Thyssenkrupp wasn't immediately available for comment.
The commission on Tuesday said the deal could reduce competition
for automotive grades, certain coated steels and electrical steel
used in engineering products.
Analysts and shareholders have expressed mixed reactions to the
deal, which was a central part of a plan initiated by the former
Thyssenkrupp chief executive, Heinrich Hiesinger, to shift the
conglomerate away from steelmaking and toward more profitable
capital-goods manufacturing.
Activist investors Cevian Capital and Elliott Management Corp.
were reportedly unhappy with the terms of the deal, while analysts
at Jefferies said it likely wouldn't meet expectations for value
creation.
Mr. Hiesinger's replacement as CEO, Guido Kerkhoff, has since
embarked on a more expansive restructuring, under which the group
will be split into two separate companies.
Write to Nathan Allen at nathan.allen@dowjones.com
(END) Dow Jones Newswires
October 31, 2018 05:29 ET (09:29 GMT)
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