ThyssenKrupp (TKAG.DE) and India’s Tata Steel (TISC.NS) announced on Wednesday, set up their European steel operations and the second largest steel manufacturer on the continent with a turnover of 15,000m Euros.
The temporary agreement will assist companies in overcapacity in the European steel market, before importing low prices, moderate construction and inefficient traditional facilities. Connecting also leads to up to 4,000 breaks or about 8% of the workforce.
The transaction will not contain the money, Tata Steel said, adding that both groups would have their debts and obligations to ensure equal participation and other long-term investors.
“We want to prevent restructuring of our steel equipment to death,” said Chairman of the Management Board of ThyssenKrupp Heinrich Hiesinger to journalists.
“No one can solve structural problems in Europe. We all suffer from congestion, which means everyone makes the same effort to restructure, “said M. Hiesinger on TV.
Steel prices in Europe ST-MBEUDNHRC-MB are by 35 percent lower than their maximum pre-financing crisis.
The proposed Memorandum of Understanding (MoU) between two steel Wednesday marks an annual synergy of 400 million to 600 million Euros, despite 25 ThyssenKrupp synergy should be greater.
Both companies are very cautious in their estimates, “said the investor
The new joint venture ThyssenKrupp Tata will be headquartered in Amsterdam and base earnings will be estimated at EUR 1 500 million in the first year.
“Excellent news,” said Dutch Prime Minister Mark Rutte.
Indian parents transfer 2.5 billion Euros in debt to the new company and have dividends from joint ventures to preserve the rest of the debt, Reuter’s spokeswoman Reuters quoted Koushik Chatterjee as general manager of the group for Reuters.
ThyssenKrupp shares closed 2.4% to EUR 25.86, compared to EUR 26.58, with the hope that joint ventures will burden the balance sheet, which is mostly caused by EUR 4 billion in retirement.
“We believe Medium-Threshold Targeted ThyssenKrupp will cut down on steel work completely, so ThyssenKrupp reiterated that it is almost pure business capital work and the proposed IPO-ready interconnection of the welcome structure, our analyst Seth Rosenfeld in the note, his marketers estimate.