Thyssenkrupp hopes to reach an agreement on merger of its European steel business with that of Tata Steel soon since the talks have entered into the final stage. A spokeswoman for Thyssenkrupp said the companies were close to a memorandum of understanding (MoU), paving the way for a detailed look at one another’s books and detailed negotiations before creating the second-largest steelmaker in Europe.
The shareholders last week put pressure on Thyssenkrupp to clinch a deal after talks over a potential steel combination dragged on for a year and a half, mainly held up by negotiations over Tata Steel's British pension liabilities. That hurdle has been removed after Tata Steel received regulatory clearance on a pension deal initially reached a month ago, enabling it to separate its UK pension scheme from the group.
Thyssenkrupp CEO Heinrich Hiesinger favours a joint steel venture, saying this could be best option to eliminate over capacities in the volatile steel sector but drawing opposition from e labour representatives who fear thousands job cuts. “We reject a merger with Tata,” said Dieter Lieske, head of the Duisburg-Dinslaken unit of IG Metall, Germany’s largest trade union, adding there were no signs that labour representatives on the group’s supervisory board would agree to the merger plan. Lieske said Ulrich Lehner, Thyssenkrupp’s supervisory board chairman, may be forced to use his casting vote if the 20-member board, with equal representation of labour and capital interests, reaches a stalemate over the decision.
Sources also reported that activist investor Cevian, Thyssenkrupp’s No.2 shareholder, was also opposed to the merger with Tata Steel, potentially robbing Hiesinger of a majority if all labour representatives also vote against the plan. Monthly Manager Magazin earlier reported that Thyssenkrupp’s supervisory board could agree to a combination either on Sept. 23 or 24, citing people involved in the negotiations.
