"With the expected unsuccessful outcome of the steel joint venture, the executive board of ThyssenKrupp AG has reassessed the strategic options for the company and will propose to the Supervisory Board to not go ahead with the planned separation into two independent companies", it said. It has seen criticism from local and national trade union groups especially, concerned about the effect on jobs and a variety of differences in business culture.
The Tata Steel Group Friday said the proposed merger of its European operations with German's Thyssenkrupp has nearly fallen through as they are not in a position to rework the remedy packages to assuage the concerns of the European Commission.
The merger of the steel divisions of Thyssenkrupp and the Indian rivals Tata and the associated splitting of the group is cancelled. The European Commission is unimpressed by the concession offered by the steel makers and is likely to block the deal.
"Tata meanwhile highlighted that the commission's feedback has indicated that is not intending to clear the proposed joint venture as it expects substantial remedies "... in the form of sale of assets of the proposed venture".
Thyssenkrupp today admitted defeat in its proposed Tata Steel merger, but sent shares higher as it revealed plans to spin off its elevator business.
He said Tata had plans to keep the United Kingdom operation running "as long as they are performing well" and were cash positive.
The management at Tata Steel had also said that, on a pro-forma basis, the turnover of the JV firm as on last reporting date would be around 17 billion euro and pre-synergy Ebitda (earnings before interest, tax, depreciation and amortisation) about 1.5 billion euro. He said the rejection of the joint venture was "a hard blow" for the company's 27,000 steelworkers.
"Tata Steel's workforce has been on a rollercoaster of uncertainty for several years".
"It's vital that the business is kept intact and the right steps are taken to safeguard jobs and continue investment to ensure a sustainable future". There are "continuing concerns of the Commission", it was said in the message of Thyssenkrupp for the justification. Addressing the media over a concall, Tata Steel managing director TV Narendran said, "while we are disappointed that the JV has not happened, things have also improved in the last three-four years, and we will continue to pursue other options".
"At the same time, the company will sustainably strengthen its capital base in order to gain the necessary financial leeway for necessary restructuring and business development", the Essen-based company said.