International Steel Mills
Thyssenkrupp, Tata Steel Drop Venture Plans
Written by Sandy Williams
May 11, 2019
Thyssenkrupp has given up on trying to merge its steel division with Tata Steel’s European division after three years of planning. The two companies announced the termination of the proposed joint steel venture on Friday, saying they could not satisfy European antitrust regulators.
Thyssenkrupp also ended its plan to separate its capital goods business—car parts, plant engineering and elevators—from the company after the September announcement caused a collapse in share price.
“Under these conditions, a separation is no longer the best solution for Thyssenkrupp. We can no longer achieve the restart we intended,” said CEO Guido Kerkhof.
Thyssenkrupp said it will cut 6,000 jobs, including a third of its steel workforce, and pursue an initial public offering for its elevator division.
The company is willing to sell a majority stake in its capital goods business, but said for now it will keep its steel and materials trading division.
“It is clear that Thyssenkrupp’s strategy of the past has failed,” said Lars Foerberg, founding partner of Cevian, an 18 percent shareholder of Thyssenkrupp.
“All stakeholders now believe that a fundamentally new direction is urgently needed to give the company’s businesses a future. There can be no historical or political taboos … if Thyssenkrupp wants to sincerely tackle underperformance and get the businesses back to growth,” added Foerberg.
Tata Steel said it is exploring options including finding a new partner for its European operations.
Sandy Williams
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