Germany’s Thyssenkrupp and India’s Tata Steel struck a preliminary deal on Wednesday to merge their European steel operations in a 50-50 joint venture to create the continent’s No.2 steelmaker after ArcelorMittal.
Tata said the two companies had signed a “memorandum of understanding” to create a 50/50 joint venture based in Amsterdam, with an annual turnover of about €15bn (£13.3bn), 48,000 employees, and annual shipments of about 21m tonnes of flat steel.
The two companies have been in talks to combine their European operations since Tata abandoned plans to sell its UK steel business last year, safeguarding the immediate future of the Port Talbot steelworks in south Wales.
The joint venture will be named ThyssenKrupp Tata Steel and is expected to be up and running in late 2018, following further negotiations, due diligence, and subject to approval from relevant authorities and shareholders.
“Under the planned joint venture, we are giving the European steel activities of ThyssenKrupp and Tata a lasting future. We are tackling the structural challenges of the European steel industry and creating a strong No 2,” said Heinrich Hiesinger, chief executive of ThyssenKrupp.
ThyssenKrupp said the combined companies would start to review its production network in 2020, to identify further savings and integration opportunities. The German company added that the outcome of the Brexit negotiations would have a bearing on decisions. “The scope for optimisation also depends on numerous external factors such as the outcome of the Brexit negotiations and the implications that follow,” it said.