Steel merger could be just weeks away
A takeover of Tata Steel's UK operations could be just weeks away, according to the German firm currently talking to its management.
Rumours of a merger between the European and UK operations of the Indian steel group Tata and the ThyssenKrupp group date back more than a year.
But Tata's £15 billion British Steel Pension Fund proved a major block to any deal. This week, however, a deal with unions, pension fund trustees and the pensions regulator mean Tata Steel was finally able to shed the fund.
It has also given the fund trustees a one third stake in the business and a payment of £550 million.
That clears the way for a merger deal with Thyssenkrupp, a German steel group that already has around half a dozen sites in the UK, including a national head office in Solihull and plants in Cradley Heath and Birmingham. Worldwide it employs 155,000 people.
Tata Steel Europe employs 8,500 in the UK – with major sites at Port Talbot and Hartlepool – including 600 in the Black Country, at plants in Wednesfield, Brierley Hill and Walsall.
Such a merger deal would create the second biggest steel business in Europe.
In a statement, the German company said: "Talks with Tata are constructive, negotiations are well on the way. It is expected that board approval will be provided upon conclusion.
"An agreement could be possible before the end of this month.”
Thyssenkrupp said it had postponed a meeting of its supervisory board on Tuesday so its executive board, which is "currently discussing strategic options" could report to it later.
A Tata Steel spokesman said: “In response to the statement issued by the Thyssenkrupp regarding its board meeting, Tata Steel would like to clarify that it continues to be in strategic discussions with Thyssenkrupp.
"The talks are currently ongoing and a decision regarding the same would be taken upon completion of the above discussions.”
There has been no reaction so far from the UK steel unions to the talk of an imminent merger. Community, the GMB and Unite said earlier this week they had agreed to the Tata pensions deal because the alternative would see the company plunge into administration. The unions had also secured a pledge from Tata Steel management for major fresh investment in the business.
Earlier this year Tata unveiled a £4m investment in a new robotic welding line at Wednesfield, making parts for carmakers.
